The Sunday Times
September 10, 2006
Louise Armitstead and Paul Durman
ENDEMOL, the television company responsible for Big Brother, is close to appointing the investment bank Credit Suisse to advise on a sale of the business, which is expected to fetch well over £1 billion.
Telefonica, the Spanish telecoms giant that owns three-quarters of Endemol, is understood to be taking advice from Merrill Lynch as it considers its options.
The biggest obstacle in the way of a sale was cleared last week when Telefonica struck an agreement with the management of Endemol France to resolve a long-standing dispute.
Endemol, whose internationally successful formats also include Deal or No Deal and Who Wants to Be a Millionaire?, is Europe’s largest maker of commercial television programmes. It is now generating revenue of more than €1 billion (£680m) a year, and is growing at close to 20% a year. The company was recently criticised for endangering the mental health of contestants on Big Brother.
The sale of such a prize media asset has attracted interest from leading private-equity firms, including Apax Partners, Cinven, CVC, Kohlberg Kravis Roberts and Permira.
Endemol’s management is expected to meet represenatives of the private-equity buyers next week to discuss the options with them individually.
Time Warner is among the big media groups expected to make an offer for Endemol. However, the company’s management team, which includes chief creative officer Peter Bazalgette, is also expected to consider a buyout.
Those familiar with Endemol said securing the support of the company’s creative team will be crucial to the success of any deal. “The management is absolutely key to the valuation,” said one insider.
Telefonica, which also bought the mobile-phone company O2 earlier this year, acquired Endemol for €5.5 billion at the top of the technology boom in 2000. The telecoms group has made it clear that it would be happy to dispose of the business, though it says it is not in any rush.
The resolution of the issues at Endemol France has made it likely that the group could be sold before the end of the year.
Endemol floated on the Amsterdam stock market last November, but the French arm had to be excluded because of the uncertainties caused by a management earn-out deal.
Telefonica has now reached agreement with the French managers over the deferred purchase price. Credit Suisse and Merrill Lynch declined to comment.
