Panel talks media mergers


The future of Time Warner, MGM, Lionsgate, Liberty Media, satellite radio and the general outlook for mergers and acquisitions in the media and entertainment field were in the spotlight Thursday at McGraw-Hill's 2008 Media Summit New York.

"There is going to be a lot of M&A activity" despite the recent credit crunch, said Santo Politi, co-founder and general partner of Spark Capital, during a panel on the industry's deal outlook. His rationale: Media giants have become more active in pursuing digital companies as they embrace the digital future and private-equity firms' ability to bid in deals is hurt by the crunch.

Earlier in the day, CBS Corp. president and CEO Leslie Moonves said prices for acquisition targets have finally started coming down from what he called "absurd" levels.

Meanwhile, the expert panel discussed possible future deals involving key industry players.

Asked about a possible dismantling of Time Warner in its current form under new CEO Jeff Bewkes, the panelists said he might make fewer changes to the conglomerate's composition than some believe.

Politi lauded TW's "great assets" and concluded, "I'm not sure it makes sense to dismantle it."

Herb Granath, former chairman emeritus of ESPN, added that Thursday's acquisition of Bebo by AOL is a clear signal from Bewkes. "He has sent a message that he is not in the dismantling business and that he is going to make it work," he said.

Asked about a possible sale of Lionsgate, Fortress Investment Group managing director Isaac Palmer said, "I think they continue on" as an independent company, adding that "one possibility is an MGM-Lionsgate merger." Lionsgate vice chairman Michael Burns indeed seemed to flirt with MGM late last year.

Meanwhile, several of the Media Summit panelists were bearish on the planned Sirius-XM merger's chances to pass regulatory muster. "There are precedents from DirecTV's and EchoStar's perspective" that regulators won't allow it, said Robert Raciti, senior vp media, communications and entertainment at GE Commercial Finance.

Asked about possible surprise deals that the current year could see, Granath predicted that Liberty Media boss John Malone will become more active in media deals again after recently taking a big stake in DirecTV. "He will one more time claim the king of the hill title," he said.