Publicly traded, Englewood, Colo.-based cable and communications conglomerate Liberty Media Corporation (NYSE: LMG.A., LMG.B) has entered into a letter of intent to purchase Four Media Company (NASDAQ: Four), a.k.a. 4MC, a Burbank-headquartered company that is parent to several post/visual effects facilities (i.e. Riot, Santa Monica; Encore Hollywood; POP in Santa Monica; Digital Magic, Santa Monica; Company 3, Santa Monica).
Per terms of the transaction, Liberty Media—a unit of AT&T—will acquire 100 percent of 4MC’s issued and outstanding stock in exchange for approximately 6.35 million shares of Class A Liberty Media Group stock. One LMG.A share will be issued for every 3.1 shares of 4MC common stock. Based on the closing price of LMG.A stock at press time, the deal to acquire 4MC is valued at around $250 million. The companies expect the acquisition to close in the first quarter of 2000, pending approval by AT&T shareholders as well as three stockholders—investment banking firm Warburg Pincus Equity Partners, Fleming Asset Management USA and 4MC chairman/CEO Robert Walston—who collectively own 70 percent of 4MC. Warburg Pincus acquired 51 percent of 4MC earlier this year (SHOOT, 1/29/99, p. 1).
Liberty Media has become a major player in the post/effects/ audio facilities business. In August (SHOOT, 8/13/99, p. 1), it signed letters of intent to acquire controlling interests in Todd-AO Corp. (NASDAQ: TODDA) and Soundelux Entertainment Group. Todd-AO maintains post facilities in Hollywood, Santa Monica, New York, Atlanta and London. (The Southern California holdings include Todd-AO Hollywood Digital, Hollywood, and Hollywood Digital West, Santa Monica.) Audio post operation Soundelux is headquartered in Hollywood. And if the acquisition of 4MC gains the necessary approvals and comes to pass, Liberty Media will further expand its post/visual effects portfolio.
Liberty’s recent buying spree—which also includes a minority stake in radio company Emmis Communications—has been fueled by the $5 billion in cash it received earlier this year from AT&T as partial payment for cable’s Tele-Communications Inc. Liberty’s investments span cable, communication, technology and Internet businesses in the U.S., Europe, South America and Asia.
Liberty Media VP David P. Beddow said, "We are impressed with the breadth and scale of Four Media’s operations and the quality of their investments in digital infrastructure. Four Media is an important asset in our services and infrastructure development strategy."
Four Media’s Walston expounded upon that strategy, citing Liberty’s extensive resources. "Liberty envisions the development of a services and infrastructure company that will be the catalyst for the creation and delivery of new forms of entertainment and advertising content," related Walston. "We are pleased that Liberty Media has recognized the value that Four Media’s management, talented employees, client relationships and technological expertise can bring to achieving their strategic objectives."
Walston is expected to continue at 4MC in a prominent role when the Liberty deal is finalized. Some anticipate that Beddow will become CEO of 4MC once it is acquired.
