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'Seinfeld'--Master of Securitizing Domain?

Bonds: Architect of lucrative David Bowie deal last year is now looking at TV syndication royalties.

April 22, 1998| From Reuters

NEW YORK — A television show about nothing could amount to something if the latest push toward securitizing future receivables in the asset-backed securities market includes comedian Jerry Seinfeld.

Picture this: Jerry and his TV sitcom cronies take on Wall Street. Touring the stock exchange, George comments on a firm's impending bankruptcy and triggers a stock slide. Kramer wreaks havoc at a private board meeting and gets tossed out with George. All the while, Elaine and Jerry talk to an investment banker about securitizing the rights to their future royalties.

David Pullman, managing director for Fahnestock & Co., the banker largely credited for coming up with the notion of rock 'n' roll securitization, is now zeroing in on another media realm: television syndication securitization.

When asked if there was a Seinfeld deal on the production line, Pullman said, "We can't comment on any of our clients because of the confidential nature of it, but we are doing TV syndication deals, and there's going to be a great one.

"If there were something happening, we'd be doing it. No one besides us has done a deal," he said.

Seinfeld attorney Jay Cooper of the law firm Manatt, Phelps & Phillips said, "There's no such deal in the works."

Last year, Pullman raised $55 million for rock icon David Bowie with bonds backed entirely by the anticipated flow of royalties from his first 25 albums.

This year, Pullman produced a deal for Motown songwriting trio Holland-Dozier-Holland, which included $30 million in bonds backed by the group's future royalties.

With Seinfeld's successful television show already in syndication and in its final season, will there be anything left to securitize?

Pullman said shows such as "Seinfeld" go through first-, second- and even third-run syndications. He noted that individuals such as Seinfeld who own a piece of the show in terms of percentages receive revenue over time. Studio heads, however, make their money upfront.

"So if these guys [Seinfeld and other percentage holders] want to attend to their projects right now, this would be a good avenue for them to get their money upfront for the value of the show going forward for years," Pullman said. "They then could invest and diversify."

Kevin Duignan, senior director of commercial asset-backed securities at credit-rating agency Fitch IBCA, said such a security would be intriguing and is something his firm believes will grow in popularity.

"But from an actual securitization standpoint, it [any Seinfeld deal] is more talk than action right now," he said.

Making a loan to a celebrity such as Seinfeld is a relatively easy transaction, Duignan said. However, securitizing any single loan would be more difficult.

Since Bowie's deal caught Wall Street's eye last year, bankers have been rubbing elbows with rock stars to cash in on what is seen as a budding new venture--and competition is on the rise.

Just last week, Rascof Zysblat Organization, the business manager of stars such as Bowie and the Rolling Stones, aligned with Prudential Investments to offer financing to entertainers and stars.

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