Goldman Sachs Preps Debt-To-Equity Scheme For Nine Entertainment
Goldman Sachs is putting together a deal for a group of U.S. hedge funds to take control of Australia’s debt-laden Nine Entertainment Co., according to the Australian Financial Review. The plan involves the hedge funds converting part of the media company’s $A3.8 billion ($3.9 billion) debt into equity. Goldman manages mezzanine debt funds owed around $1 billion by Nine. Private equity firm CVC Asia Pacific bought Nine Entertainment, which includes the Nine Network, Australian News Channel, Ticketek, the Allphones Arena and a 50% stake in NineMSN, from James Packer for $5.5 billion in 2007. Last week the firm sold its publishing division ACP Magazines to Germany’s Bauer Media Group for a reported $500 million. Under Goldman’s plan Nine would retain $1.25 billion in debt through a new five-year facility. The paper said Goldman was due to put its proposal to Nine Entertainment’s lenders including hedge funds Oaktree Capital and Apollo Global Management. -Don Groves
Australian Exhibitor Hoyts Enters VOD Biz
Launching in the first quarter of 2013, Hoyts will be the first major Australian exhibitor to offer a VOD service offering new releases day-and-date with DVD, plus classic movies and TV content. Monikered Hoyts Stream, the service aims to tap into Hoyts’ customer base which includes 547,000 members of its loyalty programs and 200,000 people who regularly use its DVD rental kiosk business Oovie. The initiative will put Hoyts Stream in direct VOD competition with Foxtel on Demand, Quickflix, iTunes, Big Pond Movies, Fetch TV, Google Play and Xbox. Nearly every Hollywood film and most indie titles are now available simultaneously on VOD and DVD in Australia. Neither of Hoyts’ major exhib rivals, Village Roadshow and Event Cinemas, has indicated any intention of entering the VOD business. Crispin Tristram, Hoyts chief marketing officer, who will run Hoyts Stream, said the firm is in advanced negotiations with U.S. majors and leading independents to acquire VOD rights. He declined to reveal pricing but said fees would be competitive. A subscription service for library film and TV content is to be introduced later in 2013. Hoyts chairman David Kirk said the company recognizes a need “to provide our customers choice for how they consume filmed entertainment from Hoyts, be it on the big screen, small screen or now any screen.” Read More »
Goldman Sachs is seeking to offload its two-thirds stake in movie financing and distribution company Alliance Films, the Financial Times reported today. Canadian-based Alliance has a sizable library and is the north-of-the-border distributor for Lionsgate, CBS Films, Weinstein Company, Focus Features and Relativity Media. The remaining third of Alliance is owned by an arm of the provincial government, Investissement Quebec. Alliance financed last year’s Best Picture Oscar winner The King’s Speech, current release Shame plus the horror movie Insidious and the upcoming haunted house thriller The Woman In Black. In addition to Canada, Alliance has distribution operations in the UK and Spain.
2ND UPDATE: A key insider at Endemol explains to me, “I think there were issues in the way he ran the company and the decsions he made, and he lost the support of many of the employees. Like when you have a coach of a soccer team the players don’t buy into the way he’s managing the team.” Not only unpopular, Ynon Kreiz exits as Endemol is facing a 900 million euro write-off of loans to the Dutch-based company which produces Big Brother among many other unscripted shows around the world. Endemol also said this month it’s exploring options to restructure its debt as widening losses will cause it to breach covenants on 2.8 billion euros of loans, including 325 million euros of mezzanine debt used to fund its 2007 buyout. Reports are circulating of buyout interest from ITV, Time Warner, and News Corp. “Clearly there are debt issues and we’re going through a financial restructuring. There also was unhappiness with a huge payout to Kreiz, which didn’t sit well,” the key insider tells me. “But from a standpoint of creativity and new shows and long-running franchises and diversification of the company, we’re on solid ground.”
The announcement of a shakeup at the top was made today by Endemol’s shareholder board (different from the usual board of directors) and first published by the Financial Times. The mogul’s exit follows a three-year period of massive dealmaking and restructuring by Kreiz, who has been chairman/CEO of the Dutch-based global leader in entertainment programming and the world’s largest independent television and digital production company since June 1, 2008. Kreiz follows out the door the Endemol chief commercial officer Tom Toumazis, who exited a few weeks ago. (“Believe me, I didn’t send him a fruit basket either,” an insider snarks.) But lest anyone doubt it, Endemol is still alive and well as the unscripted giant produces content and partners with more than 400 broadcasters and cross-media platforms worldwide as part of a global network of more than 80 companies in 26 countries employing about 6,500 people. Read More »
Bert Fields announced that Joe Silver has “won Round One” against Goldman Sachs. That’s because the entertainment biz litigator says Federal Judge Ronald S. W. Lew ruled Tuesday that Silver’s multi-pronged lawsuit alleging breach of contract and fraud against the giant investment banker could go forward to trial. Ruling from the bench, Judge Lew denied Goldman’s motion to dismiss Silver’s complaint. “Obviously, we’re very pleased with Judge Lew’s decision. It’s a complex case, but he seemed to have it down cold,” Fields said in a statement. Silver is claiming Goldman Sachs stiffed him on more than $30 million from a share of revenue from his Dark Castle Films. To put the lawsuit in context, the relationship began in those financially flush days of 2007 when Wall Street was eager to invest in the movie biz. But then the financial crisis hit, and Silver sued a year ago.
That’s the only option open to shareholders Mediaset, Goldman Sachs and Cyrte, one media analyst tells me. Whether Mediaset owner Silvio Berlusconi or TV magnate John De Mol, the man behind Cyrte, will be happy doing so is another question. I’m told De Mol in particular would be reluctant. There’s been speculation here that the super-producer will breach its debt covenants as soon as August. Endemol assures me this is not the case. “Given our current outlook, and taking into account the resources already available to the company and its shareholders, we strongly expect to continue to fully comply with our debt covenants for the foreseeable future,” Endemol says.
The company is €2.4 billion ($3 billion) in debt after a 2007 buyout. Combined with the cancellation of Big Brother on Channel 4 and NBC scrapping Deal Or No Deal in the US, it’s argued that the producer’s future is looking pretty bleak.
On the other hand, BBC1 just started an eight-part primetime summer run of the producer’s format 101 Ways to Leave a Gameshow. Fox in the US has commissioned a broadcast pilot of the show. Germany, Brazil and Turkey are making their own versions of the show, where contestants are violently ejected from the quiz.
One option not there anymore is buying back its own debt cheaply and marking it as operating profit. Endemol was rapped on the knuckles for doing that earlier this year, although it was perfectly allowable. Hedge funds representing … Read More »