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Guggenheim Partners nearing deal for Dick Clark Productions

August 30, 2012|By Joe Flint
  • The Golden Globe Awards are one of Dick Clark Productions' biggest assets.
The Golden Globe Awards are one of Dick Clark Productions' biggest… (Los Angeles Times )

Fresh from spending over $2 billion to become majority owner of the Los Angeles Dodgers, Guggenheim Partners now appears to be the leading candidate to land Dick Clark Productions -- for a price tag of close to $400 million, people close to the situation said.

The $385 million Guggenheim would shell out for DCP is more than double what current owner Red Zone Capital Management, the private equity firm controlled by Washington Redskins owner Dan Snyder, paid for the TV production company five years ago. A formal agreement could be announced as early as next week.

A Guggenheim representative declined to comment on a possible acquisition, while a person involved in the talks called speculation of a done deal "premature."

Also chasing DCP was Ryan Seacrest, the radio and TV personality who also hosts the production company's traditional "New Year's Rockin' Eve" broadcast. Seacrest, who was close to Dick Clark, the company founder who died earlier this year, had backing from private equity partners Bain Capital and Thomas H. Lee Partners.

Others in the hunt for DCP were CBS and Core Media Group and private equity firm Colony Capital.

As was the case with the Dodgers deal, rival bidders are saying that the price Guggenheim is paying, if accurate, is out of whack with what the company is worth.

Privately held DCP doesn't disclose financial information, but industry executives familiar with the company estimated its annual earnings before interest, taxes, depreciation and amortization (EBITDA) at between $35 million and $40 million, almost double from what it was prior to the Red Zone acquisition. The company also has about $165 million in debt and $18 million in cash.

The valuation that Guggenheim is placing on the company -- 10 times EBITDA -- had other potential suitors shaking their heads. They said a more reasonable price was between $250 million and $300 million.

DCP's properties include the Golden Globe Awards, "So You Think You Can Dance," the American Music Awards and "The Academy of Country Music Awards." While the awards shows are important franchises that deliver strong ratings and generate high license fees, the ancillary value of such content is limited.

DCP also has a library of music shows, but monetizing that content is a challenge because the company does not own the rights to the performances.

Red Zone put DCP on the block after getting pressure from Six Flags Inc., which wants to cash out of its 40% stake in the television company.

The Hollywood Reporter first reported the Guggenheim offer.

ALSO:

Dick Clark Productions exploring sale

Six Flags motivating possible sale of DCP

DCP library may not be music to suitors' ears

Follow Joe Flint on Twitter @JBFlint.

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