Twenty-First Century Fox, Inc. (FOXA) inked a joint venture deal with private equity firm Apollo Global Management, LLC (APO) to merge Endemol, Shine Group and CORE Media into a mega production house. Though the company did not disclose financial terms of the deal, sources value it over $2 billion.
Endemol (maker of Big Brother) and CORE (American Idol) belong to Apollo whereas Shine Group (MasterChef and The Biggest Loser) is a 21st Century Fox affiliate. Shine Group was founded by Elisabeth Murdoch and taken over by News Corporation (NWSA) in 2011.
Twenty-First Century Fox and Apollo will have a 50/50 stake in the venture. The mega production house will boast of a portfolio consisting more than 600 unscripted and scripted formats along with gaming, digital and distribution operations in over 30 countries. Sophie Turner Laing, former Managing Director of Content at BSkyB will spearhead the new production house.
CEOs, Alex Mahon of Shine Group and Just Spee of Endemol, will stay with the company through the transition and will likely to step down in 2015. The deal, subject to regulatory approval, was in the offing since May.
The deal is the latest in the media sector that is buzzing with consolidations. A few days back, Discovery Communications, Inc. (DISCA) and Liberty Global closed the multi-million dollar deal to acquire British production company All3Media. Further, Britain’s commercial broadcasting company, ITV, bought 80% of Leftfield Entertainment Group, an American reality television house.
Earlier in the year, we saw some mega deals in sector which included Comcast Corporation’s $45 billion offer for rival Time Warner Cable Inc and AT&T, Inc.’s $48.5 billion bid for DIRECTV. Notably, both the deals have hit regulatory hurdles. Another news that made the headlines was Rupert Murdoch’s (CEO 21st Century Fox) $80 billion bid for rival Time Warner Inc. The offer however was thwarted by the latter.
The reason behind such rampant consolidation in the sector is the need for superior content, which is a prerequisite for gaining better market share. By joining hands with other houses, the companies can pool talent and resources to produce quality content, cut costs and can have better negotiating abilities.
Though, 21st Century Fox carries a Zacks Rank #4 (Sell), we are likely to see an upward revision in its rank given the recent agreements, which will likely result in better performance.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment