DealZone

from Felix Salmon:

Whither the M&A scoop?

You've heard it here and everywhere: Google is buying Motorola Mobility for $12.5 billion. But here's the media twist to the story: you didn't hear it anywhere first.

Deal scoops are the most basic currency of business journalism. Once a deal is certain to get done, but before it's officially announced, an M&A banker on one side or the other (it's nearly always the bankers, rather than the lawyers or the actual companies doing the deal), tactically leaks news of the deal to a carefully-chosen source.

Virtually everybody wins when this happens. The leak always takes place when markets are closed, so there's no risk of insider trading on the news. The banker leaking the news gets to control the story, since the journalist isn't going to call around before publishing it. And the journalist gets a big scoop.

I've never been particularly impressed by these scoops: if a piece of news is going to come out in a press release in a few minutes or hours, then getting it first, while markets are closed, has little value to readers. But journalists fight incredibly hard to get them, and financial journalism's biggest names have been made this way -- think Charlie Gasparino or Andrew Ross Sorkin.

But given the value being created for bankers and journalists alike by the existence of the market in scoops, it's notable when a deal like this one comes along with no advance word at all -- not even someone reporting it breathlessly on CNBC five minutes before the press release comes out.

from Felix Salmon:

Arianna’s new empire

A brash and charismatic household name is brought in to apply magical fairy dust to a struggling media franchise with declining relevance and revenues. Tina Brown has done it successfully three times -- with Tatler, Vanity Fair, and The New Yorker -- and is now trying again with Newsweek. Arianna Huffington is newer to this game, but Tim Armstrong is surely willing to throw even more money at Arianna than Si Newhouse threw at Tina. Armstrong needs this bet to succeed -- he's placed Arianna in charge of all his media properties, while telling everybody that AOL is a media company first and foremost. And that's why Arianna is so happy today.

Zach Seward made a very smart point this morning: Arianna, with this deal, is not only massively expanding the reach of her eponymous baby -- the Huffington Post is now just one part of the massive Huffington Post Media Group -- but is also regaining control of it. The Huffington Post, like any company funded by venture capitalists, always had to be moving towards a hefty exit for its shareholders: Dan Lyons reports today that one of the key backers, Softbank, was "impatient for a return" as long ago as June 2009.

Arianna never had free rein at her company: a large part of the CEO's job was to manage her flights of fancy (free buses to the Stewart/Colbert rally in Washington!) and to make the tensions between her and co-founder Kenny Lerer as productive as possible.

from Felix Salmon:

HuffPo’s future

The $315 million that AOL is paying for the Huffington Post is roughly 3X the valuation seen at its last capital raise two years ago, is 10X its 2010 revenues and is roughly 5X estimated forward 2011 revenues. Those are all big numbers, but not insanely so, for what is clearly a big strategic move on the part of AOL. After all, AOL has a market cap of $2.3 billion: right now it still dwarfs HuffPo. That might not be true in a few years' time, if HuffPo continues growing at its current rate and AOL continues to lose subscribers and revenues.

My feeling, then, is that this deal is a good one for both sides. AOL gets something it desperately needs: a voice and a clear editorial vision. It's smart, and bold, to put Arianna in charge of all AOL's editorial content, since she is one of the precious few people who has managed to create a mass-market general-interest online publication which isn't bland and which has an instantly identifiable personality. That's a rare skill and one which AOL desperately needs to apply to its broad yet inchoate suite of websites.

As for HuffPo, it gets lots of money, great tech content from Engadget and TechCrunch, hugely valuable video-production abilities, a local infrastructure in Patch, lots of money, a public stock-market listing with which to make fill-in acquisitions and incentivize employees with options, a massive leg up in terms of reaching the older and more conservative Web 1.0 audience and did I mention the lots of money? Last year at SXSW I was talking about how ambitious New York entrepreneurs in the dot-com space have often done very well for themselves in the tech space, but have signally failed to engineer massive exits in the content space. With this sale, Jonah Peretti changes all that; his minority stake in HuffPo is probably worth more than the amount of money Jason Calacanis got when he sold Weblogs Inc to AOL.

Looking for a Sun Valley deal

The logo on the door of the Sun Valley resort, site of the 26th annual Allen & Co conference in Sun Valley, Idaho July 8, 2008. REUTERS/Rick Wilking  At Sun Valley, so far, it’s the fabricated deals that are getting the headlines. News Corp is not in talks to sell MySpace, despite the rumors. View article Read More

BP boss Tony Hayward is in the Middle East in a quest for cash to ward off takeovers. What’s in it for sovereign wealth funds in the oil-rich area? Diversity, says Reuters reporter Natsuko Waki. View article

The hedge fund industry has seen inflows of roughly $30 billion since last summer but British firm Man Group is not following the trend. Outflows from institutions have shrunk from year-ago levels but private investors are now pulling money out. View article

Now that the “world’s largest IPO” headlines  have been written about Agbank,  do the big numbers add up? View FT article

The afternoon deal

china screensThe Chinese media sector may seem an unlikely place to make money, given the government’s approach to censorship, but  Reuters’ George Chen finds the private equity industry is hungry for pre-IPO companies in an area with big potential.  Read Chen’s story: China media sector: A magnet for private equity funds and the factbox about China’s media industry.

Related stories from Reuters include:

Baidu to launch online video site for premium content

China video site PPLive eyes profits in 2010

Microsoft pegs China search market as top priority

More background:

China says 5,394 arrested in Internet porn crackdown (Reuters)

China pushes global channels for media (China Daily)

China regrets over WTO appeal ruling on publication imports (China Daily)

Senior Chinese leader urges better media supervision (Xinhua)

Fuzzy Logic? What’s bad for Live Nation and Ticketmaster isn’t bad for business

Live Nation, Ticketmaster deal gets green light in UK

Britain’s Competition Commission did an about-face last night, giving its blessing to the proposed merger of live music giants Live Nation and Ticketmaster. What’s nearly as surprising as the reversal is the starkly negative reasoning behind the decision.

UK regulators had said in October they was concerned about the move to combine the world’s largest concert promoter with the leading ticketing group, saying fans could wind up paying more to see their favorite artists. Certainly artists, fans and politicians have been lined up against the deal, so the backbone to resist the merger seemed solid enough.

But on second thought, the Commission said the new entity would not have the incentive to hurt rivals, in particularly an existing partner of Live Nation’s. “We found that, in most of these cases, the merged entity would suffer significant and immediate losses, with very uncertain prospects for long-term gain … Therefore, we concluded that it was unlikely that the merged entity would harm other ticketing agencies, promoters and venues in these ways.”

No longer just a dumb pipe

Comcast’s deal to buy a majority stake in NBC Universal from General Electric should put to rest fears at the cable operator that King Content will kill its business. But even if it becomes a thoroughfare of programming genius, the new venture will still have to convince a skeptical marketplace. The train wreck of Time Warner-AOL threw the idea of new media into financial purgatory.

Just how the venture will wring savings from its disparate businesses and avoid suffocating regulatory scrutiny are issues that could also create Comcastic headaches.  Robert MacMillan points out on our Mediafile blog, with a sensible dose of skepticism, that the new venture is affirming its commitment to local news, in effect, promising to keep the garden hoses pumping even as it primes for a media gusher with big-ticket programming.

Still, while making a new media juggernaut could still turn out to be a pipe dream, Comcast CEO Brian Roberts (pictured above) cannot be faulted for allowing his company to get stuck in a dumb pipe nightmare.

Comcast, GE and Kraft await Europe’s pleasure

The defining deals of the week, Kraft’s now officially hostile bid for Cadbury and a deal to sell a majority stake in NBC Universal to Comcast, hinge on decisions of Europe Inc, so they could well drag on many more weeks.

This morning, Kraft formally bid for Cadbury with the same offer mooted two months ago, before today’s put-up-or-shut-up deadline. Cadbury has already said no to these terms, and can be expected to do so again. But the sinking expectations that Kraft might pay more, and the lack of any other buyers coming forward, don’t help to make the case for a successful hold out by Cadbury executives.

Over the weekend we learned that GE and Comcast agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far. But French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, a source said.

Did he say IPO?

Speaking in New Delhi, General Electric CEO Jeffrey Immelt said “Discussions are ongoing whether it is an IPO or another partnership,” in response to a question on whether GE was talking to Comcast to sell a stake in the fourth-placed TV network and movie studio. With Vivendi possibly just a couple weeks away from unloading its 20 percent stake in the NBC venture, and all the talk this week about Comcast gathering coins to add the content trove to its cable mix, it might seem as if Immelt is trying to conjure something like a rabbit from a hat – or a peacock from a beret.

GE and Comcast are discussing a deal under which the largest U.S. cable firm would take control of 51 percent of NBC Universal with GE, which has the right of first refusal to pick up Vivendi’s stake if the French company exercises its annual option to sell, taking the rest. “The capital markets have definitely improved,” Immelt said. There is reason to see stability and some optimism for the future,” he said.

Set aside for a moment that the sickly advertising market that NBC already faces. The market for IPOs is picking up nicely right now, but is still in an early stage of recovery, making do with a ragtag bunch of real estate investment trusts and Chinese new-market plays. What effect do you think a big media play splashing into that pool would have on investor demand for new issues?