AOL Discovers Hollywood Media
The business of Hollywood Media (HOLL ) is not film-making. Instead, it supplies data on movies and Broadway shows to media and the Internet. It also markets tickets over the Web. It has attracted support from big media and financial companies -- including Viacom, which owns 30% of its stock; J.P. Morgan Chase, which owns 10.3%; and Tribune Co., with 10%.
The latest to join: AOL Time Warner, whose MovieFone unit formed an alliance with MovieTickets.com, which is 29% owned by Hollywood Media. This new venture creates a nationwide network that will make it easier to buy movie tickets on the Web, according to Hollywood Media Chairman Mitch Rubenstein. AOL took a 3% stake in MovieTickets.com as part of the deal.
All this bodes well for Hollywood Media, says Jan Loeb of investment bank Dresdner Kleinwort Wasserstein, who rates Hollywood Media a buy, with a 12-month price target of 17. AOL paid $8.5 million, which implies a total value of $280 million for Movietickets.com. So Hollywood's 29% stake in Movietickets.com comes to $18 million, or about $3.25 a share.
With Hollywood stock trading at 4.85, investors in Hollywood are getting its business-to-business and business-to-consumer business, and all its intellectual property, at only $1.75 a share, figures Loeb. He puts the value of the ticketing business at $4.85 a share; B2B business at $4.25; B2C business at $5.05, and the remainder at $2.45, or a total of nearly 17.
By Gene G. Marcial