Liberty buys stakes in 2 post houses

Todd-AO, Soundelux deals expected to close at year's end

It’s official: John Malone’s Liberty Media Group, a unit of AT&T, said Friday it will enter the post-production biz, acquiring controlling stakes in audio post-production houses Todd-AO Corp. and Soundelux Entertainment Group in a stock swap (Daily Variety, July 23).

Liberty will issue 1 share of its stock for every 2.5 shares of Todd-AO Class A and Class B stock. Liberty will issue 2.5 million shares of its stock, which will give it 57% of the equity and 82% of the votes of Todd-AO, a deal valued at $92.5 million. Todd-AO is valued at $108 million.

Todd-AO provides sound services, including music recording, sound editing, narration and dialogue, and re-recording, as well as visual effects and graphics services, videotape editing, and mastering of videotape and DVDs to most of the major studios.

Separately, Liberty will acquire 55% of the equity and 92% of the votes of privately held Soundelux, a provider of location-based entertainment technology and post services, in exchange for 1.9 million share of Liberty stock.

The two companies are expected to operate as subsidiaries to Liberty.

The deal requires approval by Todd-AO shareholders, and the Soundelux acquisition is dependent on the purchase of Todd-AO. Both deals are expected to close by the end of the year.

The pacts are unusual for Englewood, Colo.-based Liberty, which has had little to no assets in post-production, although it has expressed interest in entering the biz.

As part of the sale of Tele-Communications Inc. to AT&T, Liberty Media walked away with $5 billion in cash, which analysts expected it to invest in additional cablers. Although Liberty is now a subsid of AT&T, it operates as an independent company.

The company is better known for its investments in a broad range of video programming, communications, technology and Internet businesses in the U.S., Europe, South America and Asia, including cable channels BET, Discovery Channel, E!, Encore, QVC and USA Networks.

“Todd-AO and Soundelux both have established outstanding track records for their exceptional talent and for providing high quality services to the production, theater and theme park entertainment segments,” said Liberty CEO Robert Bennett in a statement.

Added Liberty veep David Beddow, “We hope (Todd-AO) will be a fundamental building block in our expanded infrastructure services business.”

Todd-AO, which includes 860 employees, is viewing the acquisition as a way to expand its post-production services internationally, according to prexy and CEO Salah M. Hassanein.

Todd-AO said in June it was pursuing selling the company because the rising cost of post-production technology has been eroding profits.

Todd-AO and Soundelux operate offices in Los Angeles, N.Y. and London.

Investors embraced the anticipated move. Shares of Todd-AO rose $1.06 to close at $14, a gain of 8%. It reached a 52-week high of $14.25 weeks ago after rumors of the acquisition appeared. Liberty closed unchanged at $37.

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