July 4, 2018 / 5:43 PM / 2 months ago

Content-hungry bidders circle 'Big Brother' maker Endemol

FRANKFURT/LONDON (Reuters) - Several bidders, including Liberty Global (LBTYA.O), are preparing offers for TV production company Endemol Shine, maker of classic reality show ‘Big Brother’ and the dystopian ‘Black Mirror’ dramas, before an initial deadline next week.

FILE PHOTO: A Big Brother eye seen in the Big Brother house in Elstree, Hertfordshire, which the National trust will open to the public for two days this weekend, September 26, 2013. REUTERS/Olivia Harris/File Photo

ITV (ITV.L), RTL Group’s (RRTL.DE) FremantleMedia and Lions Gate Entertainment (LGFa.N) are also eyeing Netherlands-based Endemol, sources close to the matter said, in a deal that comes as the rise of streaming giants Netflix (NFLX.O) and Amazon Prime (AMZN.O) has thrown the industry into turmoil.

The sellers are aiming for a price tag of between 2.5 and 3 billion euros (2.64 billion pounds) , 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 amortisation (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 catalogue 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 sceptical,” 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 (FOXA.O), 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 (DISCA.O), CEO Mike Fries said at a recent industry gathering.

“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 (PSMGn.DE) to build a German streaming TV platform and has invited others to join.

France’s Banijay Group, in which Vivendi (VIV.PA) 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 (BTGGg.F) - 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 (VOD.L) 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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