RE:RE:Canaccord increases target to $4.25bmeister - the digital media space is typified by an enormous push towards consolidation in the past few years as digital distribution has exploded. DHX would be a prime acquisition candidate for a larger media company, because of the large and growing library of children's programming.
The writing on the wall is that this company will be acquired in the next 5 years. As such, it would be intelligent for them to buy and build as rapidly as possible instead of paying a dividend, in order to increase the eventual acquisition price. I am hoping NOT to hear news of a buyout this year or next - I would like this salmon to run another 3-4 years, so to speak, before getting the premium.
I understand that in today's investing environment companies that do not offer a dividend are largely ignored by investors and so the dividend was intended to bolster the shareholder base. It also makes sense from the point of view of percentage of recurring revenues - very high at DHX.
However I think the shareholders should realize that this company is a growth company who is rapidly building content for an eventual buyout, not a classical dividend player such as a utility with nonexistent growth. Now that DHX has been noticed, trading volumes and market capitalization as evidence, they should not increase the dividend and instead use cash flows for creating new content (like today's announcement) or acquiring known entities (like the Teletubbies/In the Night Garden acquisition last week).