After the Lull

Prognosticators predict a new round of mergers and acquisitions for media and entertainment companies in 2003:

It looks as if 2003 is shaping up to be a year of the deal for media and entertainment after months of calm on the merger front and much effort and ink spent dissecting two giant marriages that went awry.

Universal Studios and Universal Music are for sale, GM’s Hughes Electronics is back on the block and a handful of cable networks are in play. Top executives at two media conferences in Gotham this week have assets to sell and others they’re hankering to buy. The ad market is perkier, balance sheets cleaner and, more then ever, financial players seems willing to step in as partners.

“I believe next year will be really big for mergers. We’ll see all the deals that didn’t happen this year,” said MGM chairman-CEO Alex Yemenidjian.

MGM badly wants to own Cablevision’s AMC movie channel. “It’s a perfect fit,” Yemenidjian told investors Wednesday at the UBS Warburg Media Conference, as the Lion seeks distribution for its impressive 4,000 title film library. MGM already owns 20% of AMC. Cablevision, which just sold Bravo to NBC, has been cagey about plans to divest itself of a second network. Some estimates value the 80% AMC stake MGM wants to acquire at $1.3 billion.

….Universal’s USA Network and Sci Fi are for sale, probably as part of a bigger package that has one bid in from billionaire Marvin Davis and others likely to come. AOL Time Warner CEO Richard Parsons indicated again during a presentation to investors that he’s up for selling the company’s stakes in Comedy Central and Court TV.

Cash-strapped AOL TW can’t make a big purchase. But it will have a new currency when it spins off Time Warner Cable into a separate publicly traded company next year. Wall Streeters say the new cabler is likely to start gobbling up distressed competitors in a another round of cable consolidation.

….Top managers at Viacom, the product of a successful merger, all have t-shirts that say, “I promise not to do anything stupid.” Given the hash that’s become of Vivendi Universal and AOL Time Warner, investors can only pray that the next crop of dealmakers won’t either. [Variety]

Sort of a financial Hippocratic oath, one I would have no hope of keeping.