NEW YORK — Spanish-lingo broadcaster Telemundo Group’s search for a strategic partner has narrowed to four companies, believed to be News Corp., King World Prods., CBS and a partnership between Sony Corp. and Tele-Communications Inc.’s programming affiliate Liberty Media.All four bidders have completed a limited amount of due diligence investigation of Telemundo in recent weeks and have been asked to submit expressions of interest within two weeks, according to people with knowledge of the discussions. But there is no guarantee any deal will result. The expressions of interest are meant to give Telemundo and its controlling shareholders, a group of investors including Leon Black’s Apollo Partners, an idea of how Telemundo is valued. Rating the interest Sources play down the level of interest that Sony/Liberty or CBS has in Telemundo. And it’s not clear how interested either King World or News Corp. is in the deal. Neither King World, Sony nor News Corp. could be reached for comment while both Liberty and CBS declined comment. Wall Street appears to believe a deal will eventuate. Telemundo’s stock price closed at $35.12 Thursday, double where it was trading in the spring and up from its $25 price in mid-July, when the company announced it had retained Lazard Freres to help it find a strategic partner to expand its programming options. The current stock price is also near the $37-$38 value that most analysts put on the stock. The most likely outcome appears to be purchase of a 25%-30% stake in Telemundo by one of the bidders at a price of about $100 million, rather than a complete sale, which would cost closer to $600 million including debt. Wall Streeters believe Telemundo’s controlling shareholders would sell the whole company only at a price above $40 a share, which is higher than anyone so far has been willing to pay. But people close to Telemundo insist the company is only looking to sell a minority stake to a partner that can improve Telemundo’s access to programming. Several of the companies looking at Telemundo, such as Sony, TCI and News Corp., couldn’t buy any more than 20%-25% anyway for differing regulatory reasons (Sony is a foreign company, TCI has cable systems and News Corp. is already at its station ownership limit). Some sources say Telemundo has been disappointed by the lack of response to its search for a partner, although people close to the company dispute that. But Telemundo has been looking for a partner for at least a year, sources say. NBC, for instance, has looked long and hard at a possible investment but was turned off when the stock price began climbing above $20 earlier this year, Wall Streeters say. Telemundo owns eight full-powered TV stations in several major U.S. markets, including New York, Los Angeles, Miami, Houston and San Francisco. Such a station group could be highly valuable to a programmer wanting to assure distribution or a broadcaster wanting to expand its station base. But Telemundo’s Spanish-language programming, which airs on the stations, has been losing viewers steadily over the past few years to its rival Univision, which has long-term rights on Spanish-language programming in the U.S. produced by Grupo Televisa. That is why Telemundo is looking for a partner to supply extra programming. News Corp. is an obvious candidate, given its huge storehouse of Fox programming, although it is not known how keen News Corp. chairman Rupert Murdoch is on the deal. CBS already has made a commitment to the Spanish-language market with its acquisition of Latin American news service TeleNoticias last year from Telemundo, and had promised to launch a U.S. cable version of the news service. CBS a looky-loo? As part of the TeleNoticias deal, CBS agreed to produce Telemundo’s nightly newscasts for five years. The Eye web’s examination of Telemundo may simply be part of CBS station group CEO Mel Karmazin’s desire to look at everything that is on the market, Wall Streeters said. Sony has plenty of Spanish-language programming and is in need of distribution as well. And King World, with more than $500 million in cash to spend, looks at most deals that come on the market. A Telemundo spokesman did not return calls.
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