UPDATE: That’s the word from UK news media. It’s just one of a number of options being considered by Shine, one of the UK’s and America’s biggest independent production companies — it bought Ben Silverman’s Reveille — and thought to be worth between $980 million and $1.3 billion. Elizabeth Murdoch has appointed JP Morgan to advise on strategic options for her company, which is being courted by other TV companies as well as her Dad’s News Corp, according to The Guardian. JP Morgan is also advising Shine on potential acquisitions. It is understood that talks with News Corp have been “progressing well” but any deal is “not yet inevitable.” BSkyB, Murdoch’s pay-TV platform in the UK, already owns 13% of Shine. Liz owns 63% of Shine and another big backer is Sony Pictures Entertainment, which has 21% and announced back in 2009 that it wanted to sell its stake but nothing has happened since. As to why News Corp would want to buy Shine, I’m told it’s part of BSkyB’s ongoing push into upmarket original programming and that this would be the next logical step. Shine earned £265 million ($420 million) last year. And BSkyB has just built an enormous space-age TV building out in West London’s Isleworth – nicknamed “Skyberia” – to centralise operations. Shine’s sales tag does sound on the high side, given that it made EBITDA of $45 million in 2009.
But the question is: why has Liz Murdoch decided now might be the right time to sell?
For one thing, prices have been rising for UK independent TV production companies because there are fewer and fewer left on the market. Time Warner bought Shed Media for £100 million ($159 million) last October. I’m told Sony Pictures TV is looking to make acquisitions as is Time Warner. Meanwhile back in 2009 Liz Murdoch reportedly declined Rupert’s request to rejoin News Corp with a seat on the conglomerate’s board. But had she wanted to do it, Liz would have had to sever her ties with Shine, which presumably would have involved selling it, perhaps to News Corp. Any sale of Shine will now intensify the palace intrigue behind Rupert’s Big Media giant. Though James Murdoch is the heir apparant, Rupe controls the company through a 37% voting interest and keeps saying he wants a family member, or even more than one, to run it when he’s gone.
For most of the 9 years she has run Shine, Liz has seen advantages to being an independent producer and retaining the rights to formats it creates. Under UK broadcast regulations, her presence on the News Corp board would have rendered Shine ineligible for the 25% of programming budgets that big British broadcasters like the BBC and Channel 4 are required to spend on independent production houses that have no links to broadcasters. This pool of funding reportedly represents a large proportion of Shine’s business.
Also she’s been able to avoid the conflicts posed by her father’s News Corp going after total control of BSkyB. (Liz worked closely with her father for several years at News Corp in a senior role at BSkyB, but eventually quit in frustration in 2000 to be entrepreneurial and independent.) News Corp now buying Shine may alarm those already worried about the effects of the BSkyB deal going through in terms of Murdoch’s grip on the media. What rivals such as the BBC, Channel 4 and the Daily Telegraph are worried about is Murdoch’s control of news, not entertainment. There are no implications for the Sky transaction.