Moguls bid for the big prize

Gripping reality drives sales of Endemol

LONDON — In common with the best reality shows, the imminent contest to buy “Big Brother” creator Endemol is certain to feature a cast of ambitious, egocentric characters — but only one winner.

Rupert Murdoch, John de Mol (who founded Endemol in 1994 with Joop van den Ende) and Silvio Berlusconi (who else?) have all been linked to potential bids for the outfit, although insiders say Mediaset, which Berlusconi controls, is no longer interested.

Endemol, operating in 24 countries, will be put up for sale by its owner, Spanish telco giant Telefonica, later this month.

This will follow a Feb. 14 general meeting of shareholders, which is expected to approve the reintegration of Endemol France.

The French arm was separated from the company before a stock market flotation in November 2005 because of a protracted dispute over bonus payments.

That spat was resolved last fall, netting Endemol France topper Stephane Courbit and his business partner, French TV star Arthur, a reported e450 million ($570 million) paving the way for a sale of the entire company.

Telefonica, which bought Endemol for $7 billion in 2000, has made it clear that an entertainment entity specializing in reality TV is not a core asset.

Others, however, cannot wait to get their hands on an outfit that has few peers in the global format production business.

“I can’t think of many other companies that have Endemol’s track record and which own such a salable portfolio of properties. They have so many long-term supply deals with leading broadcasters,” says Theresa Wise, executive partner, communications and high tech, at Accenture.

“It’s a high-margin business and relatively easy to expand because Endemol has demonstrated over many years its ability to produce successful shows across a wide range of territories,” she adds. “Not many companies apart from Fremantle have cracked this kind of business model on such an international scale.”

“Endemol has been beautifully run for 13 years,” says Peter Bennett-Jones, chairman of U.K. production company Tiger Aspect. Endemol approached him about possibly buying Tiger Aspect five years ago.

“They’ve very bottom-line-driven and very upfront about it,” he elaborates. “Put it this way, Endemol is not interested in making music and arts programs for Channel Four.”

But it is interesting in making money — lots of it. This year turnover is expected to pass $1.3 billion for the first time.

Shows like “Big Brother,” sold to more than 30 territories, and “Deal or No Deal” are building blocks of schedules the world over.

Others lining up to bid for Endemol are believed to include de Mol, who recently increased his stake in the combo to 5.15%, and Endemol France topper Courbit.

There is even a suggestion that Courbit might make a last-minute attempt to buy the company outright as part of the final reintegration of Endemol France.

And what of potential trade buyers?

“Murdoch apparently thinks the price is too high (Endemol’s stock price in the Netherlands has surged in recent weeks), but the strategic fit speaks for itself,” says an Endemol insider. “BSkyB and Fox are both brash, successful companies and you don’t get any more brash and successful than Endemol.”

Additionally, there is talk of a private-equity-backed management buyout by Endemol U.K. toppers Peter Bazalgette and Tom Barnicoat.

However, they would have to resign from the board before making their play.

It is understood that the various private equity groups circling Endemol are keen to tie in key territory heads such as Endemol USA prexy David Goldberg and U.K. chief creative officer Tim Hincks.

What, then, are these likely suitors prepared to pay?

A pricetag of around $3.2 billion is anticipated, a large sum for a European-based producer, but considerably less than the $7 billion Telefonica paid at the height of the dot-com boom.

“The issue is not how much Telefonica gets but how much less they get than they paid for it,” says a source involved in advising a would-be bidder.

Deal or no deal, whoever wins the contest, Endemol’s future looks assured.

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