Here's a great way to rejuvenate interest in your slumping sector. Alert the press that you are discussing possible M&A activity.
Is this really any different than hyping projected revenues or skewed earnings in order to pump up your stock?
Reuters
Cable TV Networks Seen Major Media Focus
Saturday December 14, 1:05 pm ET
By Reshma Kapadia
NEW YORK (Reuters) - Executives from Liberty Media, AOL Time Warner Inc., Viacom Inc. and other big media players said this week they are looking to buy, sell or swap cable networks, suggesting deal activity could pick up in 2003.
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Cable networks, which were hard to come by in the past, are now becoming more available as some companies look to ease debt loads through sales in the current downturn, while the emergence of digital cable allows more channels to exist.
"There are some juicy assets that could be (for sale). It's purely up to balance sheet concerns," said Kaufman Bros. analyst Paul Kim.
AOL Time Warner (NYSE:AOL - News) indicated at a media conference this week that it may consider exiting its CourtTV and Comedy Central joint ventures as it looks to shrink its debt. The company also owns HBO, CNN and the WB broadcast network.
Depending on what strategy Cablevision Systems Corp. (NYSE:CVC - News) pursues next year -- including the possible launch of a satellite service -- the company may need more cash and be more open to the idea of selling its AMC channel, analysts said.
The cable operator sold its stake in Bravo this year.
Viacom (NYSE:VIAb - News) and Liberty Media Corp. (NYSE:L - News) chiefs both indicated that cable network acquisitions were toward the top of their "would be nice" lists. Viacom is home to networks such as MTV, Nickelodeon, VH1, BET, Showtime and TNN.
ATTRACTIVE NETWORKS
Cablevision's AMC and Independent Film Channel, as well as Vivendi's (NYSE:V - News; Paris:EAUG.PA - News) USA Networks and SciFi channels, are among the more attractive networks mentioned at this week's media conferences in New York.
"We are looking at everything," Viacom President Mel Karmazin told investors earlier this week. "We'd love to have Sci-Fi or start our own Sci-Fi."
Liberty President and Chief Executive Robert Bennett said any acquisition targets would include entities with the scale to make additional acquisitions themselves and that would fit in well with the company's current portfolio, which includes stakes in cable networks Discovery, Starz Encore and QVC.
"We look around and say what businesses have those characteristics, (and) there are two sort of floating around: Vivendi's entertainment assets and DirecTV," Bennett said this week at a media conference.
While cable TV networks have always been attractive if a deal is right, one media banker said the market was frozen for two to three years because the limitations of analog systems.
But the build-out of new digital systems has raised the possibility of added revenues through added channel capacity, two-way communications and services like video-on-demand.
"The logjam started to break as cable operators built more (digital) capacity, in large part to compete with satellite guys," the banker said.
Not only are there more attractive networks these days but owners are also more open to selling them as they contend with their own internal issues, he added.
NEW LAUNCHES AND REINVESTING
E.W. Scripps Co. (NYSE:SSP - News) said this week it was evaluating a move into Spanish-language television for U.S. Hispanics. The project would eventually be its fifth cable network and give it access to one of the nation's fastest growing demographics.
The company said it had held informal talks with the two main U.S. Spanish-language broadcasters, Univision (NYSE:UVN - News) and Telemundo (Nasdaq:TLMD - News), but is still far from reaching a deal.
Viacom's Karmazin said the company may also evaluate a more focused approach to young Latinos via MTV in Spanish. The company currently produces a Latin American version of MTV, which is distributed in several countries in the region and can be seen in the United States through cable television.
USA Interactive (NasdaqNM:USAI - News) is expected to launch a cable travel channel next year and plans for a gay channel for Showtime have been in the works for some time now.
"There is an increase in the number of people trying to launch new networks because digital is now becoming a reality," one media banker said. "Now there's more reason for people to go beyond talking and do stuff because there is a critical mass out there."
Scripps has been one of the companies with new network launches, including Home and Garden Television, Do It Yourself, Food Network and Fine Living networks,
MTV Networks chief Tom Freston said this week he has a positive outlook for the group over the next five years and plans include more focus on MTV's adult brands, such as TNN.
"We don't have a long list of launches as new businesses because the economics of digital network is different right now -- can't achieve critical mass, large licensing fees -- our focus now is on the adult business."
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