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 ITV, RTL Group's FremantleMedia and Lions Gate Entertainment are
also eyeing Netherlands-based Endemol, sources close to the
matter said, in a deal that comes as the rise of streaming
giants Netflix and Amazon Prime has thrown the industry into
turmoil.
The sellers are aiming for a price tag of between 2.5 and 3
billion euros ($2.9-$3.5 billion), said one banker familiar with
the process, but this may prove ambitious with bids expected to
be in the 2-2.5 billion euro range.
That works out at roughly 10 times core earnings before
interest, taxation, depreciation and amortization (EBITDA),
which a second banker said would be the most the seller could
hope to get.
A source close to one potential buyer said Endemol's catalog was
heavy with ageing formats, making it potentially less attractive
than buying small production outfits and working directly with
top creative talent.
This person, who like other sources spoke on condition of
anonymity, also said Endemol carried sizable debts and had
already gone through a round of cost cutting, meaning the
potential for synergies with an acquirer might be limited.
"We're interested, yes, but skeptical," this person said. "Is
Endemol really a creative company any more? It's financially
weak."
Endemol declined to comment. Its owners, private equity firm
Apollo Global and Rupert Murdoch's Twenty-First Century Fox, did
not immediately respond to requests for comment.
HUNGER FOR QUALITY
The sale comes as traditional TV players need more quality
scripted serials to fill their fledgling video-on-demand
services, with binge-watching online viewers less likely to be
satisfied with their staple fare of reality and lifestyle shows.
It also creates an opening for Liberty, the U.S. telecoms and
pay-TV company built by John Malone, to leverage its
distribution expertise and assets.
Liberty may bid for Endemol via All3Media, the production joint
venture it owns together with Discovery Inc, CEO Mike Fries said
at a recent industry gathering.
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"It would be surprising if we didn't look at it through All3Media,"
Fries told C21 Media, adding Liberty would continue to "get its feet
wet" through content deals.
Discovery, for its part, has joined forces with Germany's
ProSiebenSat 1 Media to build a German streaming TV platform and has
invited others to join.
France's Banijay Group, in which Vivendi owns a minority stake, may
also join the contest for Endemol, another source said.
Liberty, Discovery, ITV, Banijay, Vivendi and RTL - controlled by
Germany's Bertelsmann - all declined to comment. Los Angeles-based
Lionsgate, which has movie and TV divisions, did not immediately
respond to a request for comment on the U.S. Independence Day
holiday.
Apollo Global and Fox have hired Deutsche Bank and Liontree to
advise on the deal.
They are ready to sell Endemol outright, although a potential buyer
may seek a deal in which Fox retains a minority, said one banker
familiar with the process.
Liberty has just agreed the $22 billion sale of its telecoms assets
in Germany and central Europe to Vodafone and, assuming the deal
clears antitrust scrutiny, will be looking to reinvest some of the
proceeds.
Britain's ITV and ProSieben are more financially constrained and
would have to raise cash for a bid, a second banker said, while RTL,
the European broadcaster, may lack the appetite for a big deal.
(Additional reporting by Dasha Afanasieva and Gwenaelle Barzic;
Writing by Douglas Busvine; Editing by Georgina Prodhan and Mark
Potter)
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