Shed Holds Out For $135M From Warner

Shed-Media-300x234Managers of the UK production company hope Time Warner will end up paying £90 million ($135 million) for Shed Media. They own 65% of the company between them. Analysts say that Shed may go for up to £85 million. Time Warner wants Shed, which makes Supernanny for America, because it wants to expand overseas, replicating the success it has had in American with hit shows such as The Wire and Gossip Girl – both of which have exported well. It recently hired ex-Tiger Aspect managing director Andrew Zein to buy independent TV producers and grow Warner Bros’ UK production business.

Apart from cashing out, being bought by Warner Bros would give Shed’s managers access to studio’s vast resources for deficit funding – that percentage of the budget not covered by a British broadcaster. It has been argued that the parochial nature of what most UK broadcasters’ commission makes these shows difficult to sell overseas. Access to Warner Bros’ cash could free up Shed to make more shows for the international market.

Shed has confirmed its managers are in talks with Warner Bros. No offer has yet been made though. Time Warner declined to comment.

The Sunday Times, which broke the story, says that Time Warner will pay £75 million for Shed. The company made a pre-tax profit of £9.8 million last year. Shed shares rose more than 5% after news of the deal broke.

Publicly-listed Shed has been trying to go private for more than a year. Two weeks ago, Shed told the Stock Exchange that another mystery bid had materialised in the wake of previous suitors Bowmark Capital and Darwin Private Equity walking away.

One agent I spoke to said that the deal should not greatly change the local production landscape. Warner Bros does not have an existing production presence here.

What it does provide, however, is further evidence of a handful of international TV superpowers emerging – Zodiak/RDF, Endemol/Tiger Aspect, and now Time Warner/Shed.

Speaking of Endemol, sources close to Time Warner say the studio is no longer interested in buying Five, the UK’s smallest terrestrial network. And RTL Group says that its production company FreemantleMedia/Talkback Thames are not part of any deal to sell the broadcaster. Endemol remains the front runner to buy Five.

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