Bloomberg News

Time Warner Offers $1.3 Billion Cash for ’Big Brother’ Maker

December 13, 2011

(Updates with Time Warner shares in ninth paragraph.)

Dec. 12 (Bloomberg) -- Time Warner Inc. made a $1.3 billion all-cash offer for Endemol NV as the Dutch producer of “Big Brother” television shows seeks to reach an agreement with lenders over reorganizing its debt.

The revised bid has the same value as Time Warner’s previous offer, Charles Armitstead, a London-based spokesman for Endemol, said today. New York-based Time Warner’s earlier offer of about 1 billion euros ($1.3 billion) included debt, people familiar with the matter said last month.

Endemol, whose other formats include “Deal or No Deal” and “Extreme Makeover: Home Edition,” is reorganizing 2.8 billion euros in debt because widening losses may cause it to breach covenants on its loans. The Amsterdam-based company extended a waiver of loan terms last month, which is scheduled to expire tomorrow.

“The key question now becomes if Mediaset and Clessidra will come back and try to outbid Time Warner,” said Claudio Aspesi, an analyst at Sanford C Bernstein in London.

Shareholder Mediaset SpA and Clessidra Sgr SpA have offered to inject 200 million euros into Endemol to buy out senior debt holders, giving them a stake of 51 percent, with the lenders owning the remainder, a person with knowledge of the matter said last month.

Mediaset

Mediaset wouldn’t compete for Endemol if it was offered in an auction, Vice Chairman Pier Silvio Berlusconi said on Nov. 24. A Mediaset spokeswoman declined to comment today.

“I still don’t think Mediaset wants to lose Endemol,” Aspesi said, “if they get a sense that their partners in Endemol are interested in selling they will be under some pressure to figure out what to do.”

Keith Cocozza, a spokesman for Time Warner, declined to comment. New York Post reported the new bid today.

Time Warner fell 1.3 percent to $34.14 at 11:26 a.m. in New York. Before today, the stock had gained 7.6 percent this year.

Former Italian Prime Minister Silvio Berlusconi’s Mediaset, Mediaset Espana Comunicacion SA, Goldman Sachs Group Inc. and Cyrte Fund II BV, an investment company founded by John De Mol bought Endemol in 2007 using 2.8 billion euros of leveraged loans, including 325 million euros of mezzanine debt, according to data compiled by Bloomberg. Endemol was founded in 1994 by de Mol and TV producer Joop van den Ende.

‘Final Stages’

“We remain focused on our discussions with lenders and these have entered the final stages,” Armitstead said. “We are confident that a solution that puts the company on a firm financial footing for the future is now imminent.”

In its earlier offer, Time Warner was ready to put in working capital of 100 million euros, a person with knowledge of the matter has said. In a letter to Time Warner last month, Endemol told the U.S. company that restructuring talks with lenders remained a priority for the company, people familiar with the matter have said.

Time Warner, owner of Warner Bros. and HBO, bought London- based Shed Media Group, a similar television production company, for 100 million pounds ($156 million) last year. Shed Media produces shows such as “Supernanny” in the U.K. and “Basketball Wives” in the U.S.

As owners of rights to their shows, both Endemol and Shed Media can license their programs’ concepts to producers in other countries. Time Warner has made more licensing and digital distribution deals with companies such as Netflix Inc. and Hulu LLC.

--With assistance from Amy Thomson in London, Chiara Remondini in Milan and Edmund Lee in New York. Editors: Kenneth Wong, Simon Thiel

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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