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Paramount-Viacom Merger

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Paramount-Viacom Merger
PARAMOUNT AS A TARGET

WHO IS INTERESTED MORE ?

BIG DIVERSIFIED MATURED BRANDED

1

BACKGROUND
PARAMOUNT COMMUNICATIONS ESTABLISHED PRESENCE: TYPE OF BUSINESS: • Entertainment/Motion Picture production and distribution 1934 Worldwide
Gulf & Western previously, name changed after acquisition of Paramount Pictures

TYPE: HQ:

Public NYC, New York, US

• Publishing

2

BACKGROUND
VIACOM ESTABLISHED PRESENCE: TYPE OF BUSINESS: • Networks • Cable Television • Entertainment 1971 Worldwide TYPE: HQ: Public (NYSE VIA) Burbank, California US

CALIFORNIA MIDWEST TV SERIES

14 RADIO PACIFIC NORTWEST STATIONS

3

BACKGROUND
QVC NETWORK INC. ESTABLISHED PRESENCE: 1986 Worldwide TYPE: HQ: Public West Chester, Pennsylvania US

TYPE OF BUSINESS:

•

TV home shopping

HOUSEWARES

ELECTRONICS

JEWELRY TOYS COSMETICS

4

POTENTIAL MERGER
Company Film & TV production Film Library Film Film distributio Exhibition n Cable Network Cable Operator TV stations Theme Parks Publishing

Paramount

✓ ✓ ✓

✓ ✓ ✓

✓ ✓ ✓

✓ ✓ ✓

MSG, USA (50%), SciFi (50%) MTV, VH Comple 1, Nick, mentary Showtime channels Entertain ment + QVC Shopping

7 stations

✓ ✓ ✓

✓ ✓ ✓

Viacom

✓

5 stations 12stations

QVC

7 stations

PARAMOUNT-VIACOM
ENTERTAINMENT PUBLISHING
• HIGHLY COMPLEMENTARY • CROSS PROMOTION • DISTRIBUTION UTILIZATION

PARAMOUNT-QVC
ENTERTAINMENT PUBLISHING
• RESTRUCTURING • COST CUTTING • GROWTH

• POTENTIAL SALE

• POTENTIAL SALE

5

PARAMOUNT STAND ALONE
Estimation of cost of capital Net Debt (market ≈ balance) Equity (market value) Cost of debt D/V E/V Marginal tax rate Estimated WACC Terminal Value EV/EBITDA projection EBITDA in 1998 EV in 1998
*

End of 1993 6 6,660 7.24% 12.25% 0.05 0.95 35% 12.24%

Long-term debt Cash and Equivalents Share price Shares outstanding, m Risk - free rate (30 year Treasury) Equity beta Market risk premium

1,013
1,007

55.5 120 6.25% 1 6%
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