Fusion Corporate Partners

Adam Wyden of ADW Capital Partners, L.P., a New York City based hedge fund that beneficially owns approximately 8% of IDW Media Holdings, Inc. , has sent a letter to the board of directors  and management of IDW Media, urging the Board to initiate a competitive sales process to sell the Company to a strategic buyer.   As one of the Company’s largest shareholders, ADW Capital does not believe the Company should remain an independent public company due to the concentration and illiquidity of the Company’s stock and the Company’s lack of scale in an increasingly competitive market.  ADW Capital believes a sale of the Company to the right strategic buyer would not only maximize the return of value to shareholders, but also provide the Company access to capital and resources that would allow the Company to grow.

Found below is the full text of Mr. Wyden’s letter to the Company:

December 8, 2015

IDW Media Holdings, Inc.
c/o Howard Jonas, Chairman
11 Largo Drive South
Stamford, CT 06907

Dear Board and Management of IDW Media Holdings, Inc.,

I commend the Board of Directors (the “Board”) and management on IDW Media Holdings, Inc.’s (“IDW” or the “Company”) successful separation from parent company, IDT Corporation (NYSE:  IDT), and the steps it has taken over the last six years to drive growth and profitability. As you know, ADW Capital Partners, L.P. and its affiliates (collectively, “ADW Capital”) have been long term shareholders of the Company since its spin-off and have almost unilaterally approved with the capital markets and operational decisions the Company has made to date, including its self-tender offer in late 2009 and its decision to open the IDW Entertainment division in 2013.

Notwithstanding these accomplishments, the Company is at a crossroads today and, as a substantial shareholder, I believe I have identified the most advantageous path for the Company going forward. Bluntly, it does not make sense for IDW to continue as an independent, publicly “traded” company and the Board should immediately hire a financial advisor to pursue a sale of the Company.

I have arrived at this conclusion for the following reasons:

• While the Company has averaged trading volume of ~ $40,000 over the last 30 days, the Company has gone days in the not-too- distant past without trading a single share.
• This lack of trading activity is due in large part to the very closely held nature of the shares today. I estimate between insiders, the Board, and a few institutions, over 80 percent of the Company’s shares are in firm hands and are not “for sale”.
• I think it is fair to assume that these shares are not “for sale” because the Company’s concentrated investor base (many of whom have owned its shares since the original spin-off from IDT) have followed its progress closely and recognize the intrinsic value of the shares.
• In addition to the sparse liquidity barring new investors from taking a meaningful stake in the Company, Management has been unwilling to share certain segment/unit information in its disclosures and generally engage in open dialog with its shareholders via conference calls and regular distribution of news about the Company.
• I understand that the industry the Company competes in is intensely competitive and the Company’s reluctance to share certain information may be in the best interest of the Company with regard to its financial results (its ability to grow and gain market share from its competitors). However, in conducting itself in this manner, the Company has conveyed a certain message to its existing shareholders and perhaps alienated itself from new ones.
• I believe the Company could ameliorate this issue and continue growing with the help of the right strategic partner. In addition to being able to provide capital to accelerate the growth of IDW Entertainment, I think the Company would benefit from substantial cost and revenue synergies by joining with a larger strategic partner while not being burdened by the disclosure requirements of being independent or publicly traded.
• The Company announced earlier this year that it plans to “uplist” to a major stock exchange and to increase its public profile. To date, very little progress on this front has been demonstrated or is visible.
• Based on our internal research and speaking with other investors, I think “uplisting” will do very little to maximize shareholder value. I believe public media investors are principally focused on liquidity and would most likely ascribe a “discount” to the Company’s intrinsic value predicated on its extremely concentrated ownership base and importantly its dual-class share structure.

Perhaps most important to our analysis is that while IDW has successfully grown its publishing and games business, its recent foray into entertainment (television, film, etc.) adds a substantial layer of complexity / volatility to the Company’s financials and operations, will require increased disclosure and specific expertise, and will also require substantial amounts of capital over time.  The Company cannot efficiently access this capital as a sub-scale independent public company.

The Company is in an enviable position as the fourth largest comic book publisher by dollar share. I am consistently amazed by the quality of the Company’s leadership and their ability to source, incubate, and add to their growing library of content/intellectual property.  The creative talent, ingenuity of management, and library of content would be invaluable to many large scale players who are starved for new funnels of content on their growing distribution platforms.

The proliferation of the internet and the jockeying for position of various “over the top” providers (Netflix, HBO NOW, Amazon Prime Instant Video, Hulu, etc.) has not only made libraries of original content more valuable, but also increased the overall demand for content in the aggregate. I do not expect this to change. What does seem clear is that there is a much higher degree of success in TV / Entertainment when a small “studio” like IDW can leverage the marketing, advertising, and social media resources of a larger distribution platform.

It should also not be lost on management or the Board that control premiums in the marketplace for portfolios of content are at record highs. The Company should try to structure a stock-for-stock transaction with a larger public company that would allow current shareholders to receive a premium for their stock, while allowing them the option to participate in the value and synergy IDW will add to the new platform.

I am asking the Board to do the right thing for all shareholders today. By seeking a strategic partner at this stage in the game, the Company can maximize the return of value to shareholders while also providing the Company resources to grow, without many of the competitive risks of staying a small and illiquid dual-class independent public company.

ADW Capital and its affiliates beneficially own approximately 8 percent of the Company’s shares and urge the Board to take our recommendations seriously. I look forward to hearing your response.

Sincerely yours,

Adam D. Wyden

Managing Member of ADW Capital Partners, L.P.

USA, New York, NY & Stamford, CT