Time Warner Bids for Endemol - Analyst Blog

Time Warner Inc. ( TWX ), the diversified media conglomerate, in an effort to enhance its content of programming and reality-TV shows and to tap a wider international audiences, recently made a full cash offer of €1 billion or $1.3 billion to buy Netherland based television production company Endemol NV, Bloomberg reported.

The move marks Time Warner's revised bid for Endemol against its debt-equity offer made in the last month.

However, Endemol is more likely to reject the latest offer from Time Warner, as the company remains confident about its abilities to emerge as a value company. Management added that despite of difficulties associated with the restructuring of its debt of over €2 billion, the company remains optimistic about reaching a reasonable agreement with the lenders as it is in its final stage of discussion.

Earlier Mediaset SpA and Clessidra Sgr SpA were willing to buy senior debts worth €200 million for a 51% stake in the company.

Endemol is owned by Goldman Sachs, Mediaset and founder John de Mol's boutique investment firm Cyrte and operates in 31 countries, including the United States, Britain and India. The company specializes in reality-TV and game formats. Endemol's famous reality-TV shows include Deal or No Deal and Extreme Makeover.

During current fiscal, Endemol is expected to beat the expectations of analysts and anticipated to have earnings before interest, tax, depreciation and amortization (EBITDA) of over €140 million.

Based in New York, Time Warner is a media and entertainment company. The company's businesses include interactive services, cable systems, filmed entertainment, television networks, and publishing. Time Warner aims to gain competitive advantage from constructive collaboration.

The company has been expanding its digital presence to facilitate consumers to enjoy contents in more platforms and devices. Time Warner enhanced the reach of HBO GO streaming service to mobile devices and entered into a deal with Apple so that the print subscribers of Time, Fortune and Sports Illustrated may access the iPad editions of these magazines at no additional charges. Moreover, Warner Bros. became the first movie studio to offer video on demand, and acquired Flixster, a movie search application on smartphones and mobile devices.

However, the significant potential risk is the company's high dependence on advertising revenue, which we think will remain under pressure given the ongoing economic upheaval.

Currently, we have a long-term 'Neutral' rating on the stock. Moreover, Time Warner, which competes with News Corporation ( NWSA ) and Walt Disney Company ( DIS ), holds a Zacks #2 Rank, which translates into a short-term 'Buy' recommendation, and correlates with our long-term view.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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