NBCU Enters Exclusive Talks for The Weather Channel
Time Warner Drops Bid for Cable Network
By Robert Marich -- Broadcasting & Cable, 6/14/2008 6:23:00 PM
The Wall Street Journal said Saturday that a $3.5 billion price tag is under discussion, which is in the middle of a $3 billion-$4 billion range that most analysts valued the basic-cable network in. Seller Landmark Communications reportedly had been hoping for $5 billion.
The Journal article said Time Warner withdrew when Landmark, the closely held, Virginia-based, family-owned media company, said it needed more time to evaluate second-round bids Friday.
In May, Viacom -- a deep-pocket operator of basic-cable networks -- told an investors conference it would not pursue TWC.
Time Warner’s withdrawal was not a complete surprise given the fact that the investment community has been critical of corporate CEO Jeffrey Bewkes for the $850 million acquisition earlier this year of social Web site Bebo, which was meant to shore up the company’s AOL unit. Bewkes acknowledged at a June 9 investors’ conference that it’s not clear if Bebo will pay off and promised that the company would be more disciplined in future acquisitions.
Time Warner’s withdrawal was a blow to hope for a high price because it will receive $9.25 billion once the planned spinoff of its affiliated Time Warner Cable is complete. Also, Time Warner could achieve obvious synergy by packaging TWC with its CNN, since both are in the information business.
NBC Universal’s bid is in partnership with private-equity outfits Blackstone Group and Bain Capital. NBCU could realize its own synergies by linking TWC to its NBC Weather Plus service. Less likely bidders are said to be CBS, although its plate may be full after buying Web outfit CNET for $1.8 billion; cable-sector giant Liberty Media; and Comcast.
Basic-cable networks are on a hot streak running up audiences, advertising and carriage fees. The most likely candidates to buy TWC are existing players, since groupings have the most clout in extracting rich carriage fees from cable and other multichannel platforms.
Big cable networks are rarely up for sale, although Cablevision Systems' Rainbow Media agreed to buy Sundance Channel in May for $496 million in cash and stock. Rainbow already owns The Independent Film Channel, WE tv and Fuse.
In recent years, QVC, E! Entertainment Television, Style, Speedvision, Bravo and Sci Fi Channel all changed hands, going to cable-industry insiders.
The difficulty in valuing properties was evidenced by Disney’s acquisition in 2001 of Fox Family Worldwide (whose flagship is now called ABC Family) for $5.1 billion. In retrospect, Disney overpaid, later taking hundreds millions of dollars in write-downs.
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