Time Warner Inc. (TWX) made an offer of about 1 billion euros ($1.4 billion) for Endemol NV, the Dutch producer of “Big Brother” television shows that is seeking to reorganize 2.8 billion euros in debt, according to two people with knowledge of the matter.
The bid includes debt and Time Warner is ready to put in working capital of 100 million euros, said one of the people, asking not to be named because the talks are confidential. Keith Cocozza, a spokesman for Time Warner, declined to comment on the offer and didn’t immediately respond to the deal terms.
Endemol, whose other formats include “Deal or No Deal” and “Extreme Makeover: Home Edition,” said earlier this year that it’s exploring options to restructure debt because widening losses may cause it to breach covenants on its loans. The Amsterdam-based company this week won approval from lenders to extend the waiver of loan terms for a second time until mid- November, people with knowledge of the matter have said.
Italian Prime Minister Silvio Berlusconi’s Mediaset SpA (MS), Mediaset Espana Comunicacion SA, Goldman Sachs Group Inc. (GS) and Cyrte Fund II BV, an investment company founded by John De Mol, bought Endemol in 2007 using 2.8 billion euros of leveraged loans, including 325 million euros of mezzanine debt, according to data compiled by Bloomberg. Endemol was founded in 1994 by de Mol and TV producer Joop van den Ende.
Time Warner hasn’t given a deadline for Endemol to respond, said one of the people. At the same time, Mediaset and Clessidra SGR SpA have offered to inject 200 million euros into Endemol to buy out senior debt holders, increasing their stake to 51 percent, with the lenders owning the remainder, the person said.
A Clessidra spokeswoman declined to comment. A Mediaset spokesman didn’t immediately have a comment.
Charlie Armitstead, an Endemol spokesman in London, said the company has received an approach from New York-based Time Warner “which offers an alternative to the lenders as the talks on debt restructuring are continuing.”
Endemol’s enterprise value has fallen to between 800 million euros and 1.2 billion euros from 3.1 billion euros four years ago, people with knowledge of the situation said in July.
Net loss widened to 1.29 billion euros last year from 345 million euros as Endemol wrote down the value of units to reflect a slower economic recovery, according to its annual report. Revenue gained 4.7 percent to 1.25 billion euros.
In June, Endemol said Chairman and Chief Executive Officer Ynon Kreiz resigned because of a difference of opinion about the company’s future direction.
Time Warner’s Deals
Time Warner, also owner of Warner Bros. and HBO, bought London-based Shed Media Group, a similar television production company, for 100 million pounds ($160 million) last year. Shed Media produces shows such as “Supernanny” in the U.K. and “Basketball Wives” in the U.S.
As owners of rights to their shows, both Endemol and Shed Media can license their programs’ concepts to producers in other countries. Time Warner has made more licensing and digital distribution deals with companies such as Netflix Inc. (NFLX) and Hulu LLC.
Sales at Time Warner’s cable networks unit, which includes TNT, TBS, HBO and Cartoon Network, rose 6.8 percent to $3.2 billion in the quarter ended Sept. 30. The unit accounted for 68 percent of operating income.
Time Warner rose 0.1 percent to $34.44 at the close in New York.