Harry Sloan's Global Eagle Signs $430 Million Airline Entertainment Deal

10:37 AM PST 11/08/2012 by Alex Ben Block
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Harry Sloan and Jeff Sagansky’s new effort acquires two companies that provide broadband and entertainment for airlines.

Harry Sloan and Jeff Sagansky’s recently formed company Global Eagle Acquisition Corp. is taking flight with a $430 million deal to create what it is calling the “largest integrated entertainment platform for the global airline industry,” it was announced Thursday.

Global Eagle, which is being renamed Global Eagle Entertainment, has signed an agreement to acquire Row 44 Inc., which provides broadband services to airlines, and 86 percent of Advanced Inflight Alliance AG, a Frankfurt, Germany, company that supplies games, movies and general entertainment to the airline industry.

“By combining AIA's access to the installed in-flight entertainment market with Row 44's Wi-Fi to mobile device capability,” said Sloan, “Global Eagle has potential access to 100 percent of the airline passenger experience, creating an addressable market as large as the global airline industry. This is exactly the kind of worldwide digital media opportunity we’ve been seeking for Global Eagle since our IPO; and this is also a platform for Jeff and me to utilize our media and content relationships and experience to drive expansion and enhancement of in-flight content and programming around the world.”

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This is the biggest deal for Sloan and Sagansky since they raised a $190 million fund with an IPO in May 2011. According to the announcement, they “believe that this marriage of content, connectivity and capital will create a superior platform to exploit the rapidly expanding global airline industry as it increasingly focuses on the in-cabin entertainment experience and other ancillary revenue opportunities.”

Sloan started his career in Hollywood as an attorney before becoming an executive and dealmaker. From 2005 until 2009, Sloan was chairman and CEO of MGM. He also made millions developing media in Scandinavia as chairman and CEO of SBS Broadcasting between 1990 and 2001. Sloan recently was a finance chairman for the Mitt Romney campaign.

Sagansky was president of CBS Entertainment from 1990 to 1994. He was co-president of Sony Pictures Entertainment from 1996 to 1998. He was CEO of Paxson Communications from 1998 until 2002. He also held positions at Peach Arch, RHI Entertainment, Winchester Capital Management and Elm Tree Partners, a privately held casino development company.

As part of the deal, Global Eagle is purchasing the Alliance shares from PAR Investment Partners Lp., which also is a major shareholder in Row 44. Alliance will retain its listing on the Frankfurt Stock Exchange with the remaining 14 percent of the shares held by the public.

To finance the transactions, PAR will purchase 7.1 million shares of Global Eagle, which will include both voting and nonvoting stock.

Row 44, based in Westlake Village, Calif., provides in-flight broadband and in-flight entertainment via satellite to commercial airlines. Customers have included Southwest Airlines, Norwegian Air Shuttle, Transaero and UTair Aviation (Russia), Icelandair (Iceland) and Mango Airlines (Africa).

Edward Shapiro, a partner of PAR Capital Management and chairman of the board of Row 44 and chairman of AIA’s supervisory board, will become chairman of Global Eagle Entertainment after the closing. “With this transaction, not only will the two companies be able to enhance their offerings,” said Shapiro, “but they will gain access to additional capital and relevant entertainment industry experience.” 

All the Row 44 and AIA senior management teams, including Row 44 CEO John LaValle and AIA CEO Louis Belanger-Martin, continue in their current positions.

Citigroup is lead capital markets adviser to Global Eagle, and BofA Merrill Lynch and Citigroup are providing financial advisory services to Global Eagle. RBC Capital Markets provides advisory services to AIA. Seabury Group Llc. is advising Row 44.  Legal counsel to Global Eagle is McDermott Will & Emery Llp. Legal counsel to PAR are Goodwin Procter Llp. and SJ Berwin.  Legal counsel to Row 44 is Strategic Law Partners Llp. 

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