Media Deal Trigger Fingers Get Itchy

Industry buzz increasing around improving M&A marketplace

September marks the beginning of the football season and the television season, but this year it could also be the start of a mergers and acquisitions season.

Several Wall Street analysts are suggesting it's time the M&A market got started again. Citigroup's media analyst Jason Bazinet made the case Sept. 10 for a Comcast/Time Warner Cable merger. And earlier last week, J.P. Morgan's Stephen Tusa helped boost General Electric's stock price with a report that laid out options for NBC Universal's future.

Disney's $4 billion purchase of Marvel and its less noted Sept. 10 deal for Wideload Games has whetted the appetite of investors for some new activity on that front.

Market conditions are ripe. Political money is primed to kick start the ad markets and media stocks are relatively cheap with the potential upswings not yet priced into shares, say some. TNS/CMAG representatives said Sept. 10 that 2009 could see a potential $1 billion windfall in election and issues money while TVB predicted last week that national spot pricing will be up between 6% and 12%.

So now the fantasy football-like chatter turns to who could be next. While NBC Universal is the sexiest subject among rumored targets, Scripps Networks is also often mentioned. “Scripps is going to be gone in six months,” predicts one veteran Wall Street analyst who did not wish to be named. Industry insiders point out that the company is soon to renegotiate its cable distribution contracts, and being part of a bigger cable group could give the lifestyle giant a little more leverage.

Many senior media industry participants at last week's Bank of America-Merrill Lynch Media Conference played down their interest in any major purchases, but as always they could be playing coy about their plans.

Both Time Warner and Comcast were at pains to try and damp down speculation that they might be in the market for something large, especially given the gossip swirling around whether Vivendi will decide to dump its 20% stake in NBC Universal.

Speaking at the conference in Marina del Rey, California last week, Comcast's COO Steve Burke suggested the company was more interested in content deals than adding to distribution. “We would like to get bigger if the economics were right,” Burke said. “I think we would not be doing our job if we weren't trying to figure out how to get bigger in those businesses. If the opportunity came about where we could add cable content to our portfolio, I think we would do it.”

Time Warner CFO John Martin also said the company wasn't in the market for a transformative deal, but said: “We are trying to focus our resources in capital, we've identified areas where we will be willing to local TV and home production, games and networks where we could opportunistically and thoughtfully expand, and opportunities to identify emerging territories where we could build.”

When asked about future plans for his company's cash, CBS Corporation Chief Leslie Moonves declined to discuss the subject: “It's too early to say, there are a lot of opportunities to do things and I'm not going to state anything right now.” On the subject of acquisitions, he said there may be some things that might work within the company's six content areas. He described them as: news and tech, entertainment, sports, games, music and international. He says, “We could see tuck-in acquisitions that would fit in with those.”