MediaFile

Sumner Redstone cool with Dauman; theaters hot with buyers

As we previously noted in MediaFile the main takeway from Viacom’s earnings call was that advertising is awful, but it’s not getting worse. But there were a few other highlights, too, so here’s a time-saving rundown:

Sumner Redstone is still a gigantic fan of Philippe Dauman. Even after 12-months in which Viacom’s stock price has dropped 50 percent, Redstone introduced Dauman as “my great friend” and “the greatest CEO of all” while crediting him “capable and insightful leadership.”

National Amusement’s movie theaters are a hot ticket. Redstone said the sale of theaters in the United Kingdom and United States has attracted “substantial preliminary interest” from buyers. “”We are very encouraged by both the number of interested bidders and particularly the prices being discussed.”

Dauman isn’t sweating Epix. Asked what happens to the bottom line, worst case, if the movie network isn’t launched on the terms that Viacom wants, Dauman responded that, “There is not a worst case here. We are quite engaged in discussions. You will see the affiliate agreements being announced as we get closer to launch. So we are in good shape and furthermore, in addition to covering the movie costs on the Paramount side, we are creating a great new asset for Viacom and as well as our partners.

(Photo: Reuters)

Outlook grim for media and entertainment deals

Deal-making in the U.S. media and entertainment sectors is going to be down this year, says a new PricewaterhouseCoopers survey (request a copy here). Now, that’s not a new or startling conclusion given the state of the economy, but it’s just another piece of evidence that when consumers and advertisers get thrifty, deal makers can end up become benchwarmers as companies struggle with cost cuts and other exigencies.

Here are some industry trends for 2009 from the PWC survey:

    Declining consumer spending is hitting many media and entertainment companies. What’s more, these declines were exacerbated by technological convergence, as these firms adapt to and look for ways to make money off new Internet technologies. Overall U.S. advertising market is going to shrink as sponsors cut ad budgets across retail, consumer goods, automotive, financial and other sectors. Companies will continue to divest their non-core assets, but those that don’t get a good price will prefer to hold on rather than sell at bargain prices. Bolt-on deals will likely be popular for risk-averse companies, so deals below $1 billion — mostly small and mid-market companies — will be a rising trend. Private equity will remain quiet since the debt markets aren’t really healthy yet. Deal structures will change this year, given the difficulty of getting debt financing. The strategic rationale for doing a deal will be more important than getting a favorable capital structure.

But all hope is not lost, according to PWC’s Transaction Services Entertainment & Media Leader Thomas Rooney:

With M&A activity ingrained in the DNA of so many companies and the ever growing presence of private equity, E&M deal activity might not be as quiet as many expect in 2009… History has shown the E&M industry to be one of the more active M&A sectors irrespective of market and economic conditions.

Redstone debt crunch could be easing, despite income loss

Here’s the latest on Sumner Redstone: On CBS’s earnings call he reiterated that negotiations with lenders regarding National Amusements’ debt situation were moving forward.

“We are making very good progress with our creditors, and as I have also said before, we have not, since our original sale, sold a single share of CBS or Viacom, and our lenders are not urging us to do so,” he said.

He also told investors that the CBS dividend cut — they slashed it by 82 percent to 5 cents — wouldn’t mean a thing as far as National Amusements’ debt talks go (How the dividend cut will impact Redstone himself is another matter. Last year, he took home more than $80 million in dividend payments).

Redstone’s last picture show

Media mogul Sumner Redstone appears to be sticking with his decision to not sell more shares in Viacom and CBS. Here’s the Financial Times:

Media mogul Sumner Redstone has reached agreement with his daughter, Shari, to put some of National Amusement’s 1,500 cinemas on the block rather than the entire division, as part of debt-restructuring discussions to avoid selling more shares of Viacom and CBS, according to people familiar with the matter.

If lenders agree, the plan would clear the way to sell a part of the US group and 19 theatres in the UK. A prospectus is not expected to be released until early January, one person familiar with the discussions said.

Sports and economy square off

Sorting out what the economic downturn means for the sports world has become something of a sport itself.

Will consumers’ need to escape with some old-fashioned football trump their anxiety about shelling out hard-earned money for tickets, parking and hotdogs at the game?

Will TV broadcasters cash in on higher ratings, as consumers skip more expensive entertainment to spend time at home watching baseball or basketball on television? Or has devastation across the financial services and auto industries — two big advertisers in sports — doomed TV broadcasters regardless of audience size?

What’s new with the Redstone family?

sumner.jpgThe Redstone family knows drama. Late last week, Sumner Redstone’s family holding, National Amusements, announced that it was making a substantial stock sale in each of its key holdings, CBS and Viacom to comply with debt covenants. 

But the sale raised questions about whether some of the proceeds from the sales were actually earmarked to fund and expansion of National Amusements movie theater business, as reported by the Wall Street Journal.

Sumner Redstone’s daughter, Shari, who runs National Amusements, issued a statement to the Wall Street Journal denying that the stock sale had anything to do with expanding the theater business.