Time Warner for sale

[Cyxeris]

Group prepares bid for Time Warner music
Tue 18 November, 2003 06:08

NEW YORK (Reuters) - An investor group that includes media moguls Haim Saban and Edgar Bronfman Jr. is preparing a $2.5 billion (1.5 billion pound) bid for Time Warner's music business, according to a person familiar with the situation.

Sources have said that Time Warner would choose between a bid from the investor group and one from music industry rival EMI Group by a Thursday board meeting.

EMI is only bidding for Time Warner's recorded music business, while the Saban, Bronfman group wants the music publishing unit as well, sources have said.

An offer from EMI likely would face close scrutiny by regulators in the U.S. and in Europe, while it is believed that a bid from the investor group would probably result in a smoother ride through the regulatory process.


Source: http://www.reuters.co.uk/newsPackageArticle.jhtml?type=businessNews&storyID=404649§ion=finance

[mosc]

Thanks for posting this news. I'm going to call 'em up and make a bid too.

[Cyxeris]

I'll buy THAT for a dollar! Maybe we can get a group rate.

Cyx

[Cyxeris]

Bronfman May Buy Warner Music
Fri Nov 21,12:30 PM ET Add Technology - washingtonpost.com to My Yahoo!


By David A. Vise, Washington Post Staff Writer

Time Warner Inc. is in negotiations to sell Warner Music Group for about $2.5 billion to an investment team led by Seagram's heir Edgar Bronfman Jr., sources said yesterday, in a deal that would continue a shakeout that is reshaping an industry battered by online music swapping and falling CD sales.

For Time Warner, a cash-rich deal with Bronfman would enable the company to continue slashing its debt, which Chairman Richard D. Parsons had said he wants to cut to $20 billion by the end of next year. The proposed deal would accelerate that timetable, leaving Time Warner with about $20.5 billion in debt earlier in 2004.

For Bronfman, the Warner Music deal would represent a comeback after an unsuccessful bid for Vivendi Universal's media operations earlier this year. Vivendi rejected the Bronfman bid, choosing instead to sell Universal studios and other media properties for $14 billion to General Electric Co., the corporate parent company of NBC.

The Warner Music Group has more than 1,000 artists, including Josh Groban, P.O.D., Faith Hill, Linkin Park, Kid Rock, Michelle Branch, Phil Collins and Alanis Morissette. Its Warner/Chappell Music Inc. publishing division, which would also be part of a deal with Bronfman, controls more than 1 million music copyrights.

Following a meeting of its board of directors yesterday, Time Warner executives were authorized to enter into serious talks with the Bronfman-led group, which now has a period of days to negotiate a binding agreement, sources said. If a final agreement is not reached soon enough, Time Warner executives could resume talks with another suitor, British music giant EMI Group PLC, sources said.

In addition to billions of dollars in cash, Bronfman's offer could leave Time Warner with a minority stake in Warner Music. That stake would give Time Warner continuing participation in the music business, which has fallen on hard times recently as music sales have fallen and more and more people look online for songs.

The Time Warner board favored Bronfman's bid over an offer from EMI in part because an EMI-Warner Music deal likely would have prompted serious antitrust reviews with uncertain outcomes in the United States and Europe, sources said. Antitrust regulators in Europe blocked an attempt by Warner Music to absorb EMI several years ago.

EMI had appeared to be the leading bidder until Sony Music Entertainment Inc. recently announced that it was acquiring Bertelsmann AG (news - web sites)'s music business. Time Warner lawyers concluded that potential antitrust problems in an EMI-Warner Music combination loomed much larger after the Sony-Bertelsmann deal since the pair of transactions would have reduced the number of major global music players from five to three, sources said.

EMI remains interested in pursuing a deal with Warner Music, which could materialize if the Bronfman talks don't lead to a final agreement. In a statement yesterday, EMI Group said Time Warner is "considering a possible proposal from another party as an alternative to our own firm offer." Spokesmen for Bronfman and Time Warner declined comment.

Bronfman has assembled a blue-chip group of investors that includes Thomas H. Lee Partners, Bain Capital LLC, Providence Capital Inc., Quadrangle Group LLC, and entrepreneur Haim Saban. Bronfman and his family also continue to be major shareholders of Vivendi Universal, where he serves as a director.

After the billionaire Bronfmans built a fortune through the Seagrams liquor business, heir Edgar Bronfman Jr. steered the family's investments in a new direction, branching out into Hollywood.

Bronfman led Seagram to acquire Universal's parent, MCA, in 1995 for $5.7 billion. He then ran Universal's entertainment businesses from 1995 until 2000, when Paris-based Vivendi bought the company. Vivendi's precarious financial condition forced it to put prized media assets up for sale this year, culminating in the deal with GE.

Bronfman is no stranger to Time Warner either. In the early 1990s, Seagram bought more than $2 billion of Time Warner stock, which Bronfman sold five years later at a profit.




So the person that is in the frontrunning for buying Time Warner is a major stockholder in Universal Vivendi. This would, in a sense, make the big 5 the big 4. Does the term "incestuous squealings" ring a bell?

Mosc, still thinking of making a bid on that?

Cyx

[mosc]

[Cyxeris]

ROFL, good point! I'm sure their assets could come in handy, I suppose. I think it's important to keep up with what these cats are up to up there, it tends to make identifying nonsense from them or their subsidiaries easier, and certainly sheds light on their agendas.

There is nothing malicious about our's. I like that.

Cyx

[elektro80]

Right on, Jeremy. These dudes gotta spray out them agendas out there on the parking lot. Tight grip on them UZIS, dudes.

[Cyxeris]

They may be relics of a dead age, but they should still be kept many eyes on. What was that line? "If we are to beat the bug, we must first understand the bug."

Cyx

[Cyxeris]

NEW YORK (Reuters) - Time Warner Inc. (TWX) plans to announce on Monday that it will sell its Warner Music business to a group of investors that includes former Seagram Chairman Edgar Bronfman Jr. for about $2.61 billion, people familiar with the situation said on Sunday.

Bronfman and private equity firm Thomas H. Lee will lead the acquisition. Billionaire Haim Saban, the former children's programming magnate, had pulled out of the group over the weekend, but rejoined later on Sunday night, these people said.

Investment firms Providence Equity Partners and Bain Capital also are part of the group, they added.

People close to the deal cautioned that final details were still being negotiated, which could change the composition of the buying group and/or possibly force the postponement of an announcement.

Warner Music, home to Madonna, Kid Rock and Missy Elliott, is the No. 4 music company with about 11.9 percent of the global market share.

Time Warner on Thursday opted to pursue talks with the Bronfman camp rather than a rival offer from No. 3 music company EMI Group Plc (EMI.L), whose roster includes The Beatles and Norah Jones.

EMI met with Warner Music officials over the weekend to highlight the benefits of its offer, sources said, emphasizing as much as $300 million of cost savings that could result from combining the recorded music units of the two companies. EMI bid about $1 billion for a majority stake in the combined company, sources have said.

Before Saban's re-entry, Bronfman and the private equity firms were to put up about $1.35 billion of equity and rely on debt funding for the rest of the deal. Thomas H. Lee would put up about $600 million, Bain $350 million, Bronfman $250 million and Providence Equity $150 million, said people familiar with the deal.

However, with Saban back in, it was not immediately clear how much money each would put in to the deal, which is expected to close in about two months.

The firms aim to rely on the steady income of the music publishing business, Warner Chappell, as they seek to reshape the recorded music unit by cutting costs. In recent years, the music industry has watched retail sales dwindle in the face of steep competition from free online file-sharing services.

As part of the deal, Time Warner will have the option of buying a 15 percent stake in Warner Music three years after the deal closes at a 25 percent discount from the assessed fair market value, one source said.

Separately, Time Warner also could opt for a 19.9 percent stake in Warner Music, which will keep its name, if the investor group merges it with another industry rival later on, sources have said.

The companies expect Warner Music Chairman Roger Ames to stay on and help run the business with Bronfman.

For Bronfman, the deal marks something of a chance at redemption. He built the world's biggest music company, Universal Music, while at Seagram, but then sold the company to Vivendi in a stock deal that wound up costing him and his family hundreds of millions of dollars.

He tried to buy back some of the Universal assets this summer, but ultimately was bested in the auction by General Electric Co.'s (GE) NBC television network.

Spokespeople for Time Warner, Warner Music, Bronfman, Saban and Providence Equity declined to comment. Officials from Thomas H. Lee, Bain and EMI could not immediately be reached. (Additional reporting by Merissa Marr in London and Derek Caney in New York)

© Copyright Reuters Ltd. All rights reserved. The information contained In this news report may not be published, broadcast or otherwise distributed without the prior written authority of Reuters Ltd.


11/23/2003 20:38