/// We Play Matchmaker for Merger Candidates AMC, Scripps and IPG

May 27, 2014  |  Media Week

Who's next? The recent spree of mergers and acquisitions doesn't appear to be at an end, at least not to the market-watchers at Barron's, who listed Mad Men and Walking Dead network group AMC as a ripe target for investors looking to get into the television game, along with Scripps Networks Interactive, the conglomerate behind the Food Network, HGTV and the Cooking channel. Also a potential bargain: Interpublic Group (IPG). One of the reasons each of these companies looks like a strong candidate for acquisition is its ratio of enterprise value—the amount of capital it would take to purchase the company—to earnings. Buy low, sell high. So who might be interested in each of these organizations? AMC : The network group has gone from strength to strength over the last few years with hits like Mad Men, The Walking Dead and Breaking Bad bringing in revenue not merely from subscribers and advertisers, but from third-party streaming service Netflix, which pays for season-old content of the flagship network's signature serialized dramas. That, in turn, drives live viewership. Morgan Stanley has been cautious about the company, emphasizing the inherent risk in buying a bunch of new shows (which Netflix has indeed done), but its long-term prospects, Morgan Stanley says, are good. Our pick for a nice boyfriend : Netflix, definitely. With a staggering market cap , It's a company with plenty of capital looking for a more stable revenue stream as competition heats up around its core businesses. It's not actually that much bigger than Netflix in revenue terms ($4.37 billion last year vs. $1.59 billion), but its main concern at the moment is off-the-books commitments that could be mitigated by the acquisition of a high-profile content company.


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