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More media marriages?
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June 14, 2000: 6:50 p.m. ET
Seagram talks again spotlight possible mergers as media seek growth
By Staff Writer Franklin Paul
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NEW YORK (CNNfn) - Media conglomerates, thirsty to beef up programming on their networks and grow their distribution channels, are actively talking deals - potentially blockbuster alliances - with one another, experts say.
Possible pairings such as Disney and Yahoo!, or Viacom and Chris-Craft, linger on the lips of analysts, as media companies seek new ways to push their unique content onto the Internet, and provide advertisers with more diverse audience choices, to whom they can pitch their products.
But industry experts say most of the biggest deals have already been completed and that the remaining large players need not rush into these deals. For now, talk may be as far as they get.
"I think everyone is looking for partners to take advantage of the Internet, and take advantage of the growing value of content," said Mark Holmes, an analyst at A.G. Edwards. "But does that mean Disney has to sell out? I don't think that's necessarily true either."
Tuesday's confirmation of long-rumored merger talks between Seagram and France's Vivendi fueled stocks of major media conglomerates on Wednesday, and re-ignited industry speculation about the next blockbuster betrothal.
 Shares of Seagram (VO: Research, Estimates), the Canadian spirits maker with huge footprints in the music, film and amusement park industries, jumped 13 percent to close at 60-1/8 on Wednesday, just a few dollars short of its highest level in a year.
Investors also smiled on media giants News Corp. (NWS: Research, Estimates), which gained 1-3/8 top 51-3/8, Viacom (VIA: Research, Estimates), which climbed 1-1/8 to 66-5/8 and Time Warner (TWX: Research, Estimates), the parent of CNNfn.com, which rose 1-3/4 to 77.
In addition, investors flocked to shares of TV station operator Chris-Craft (CCN: Research, Estimates), up 2-3/16 to 66-1/8, and to Barry Diller's cable network company USA Networks (USAI: Research, Estimates) - of which Seagram holds a large stake - up 2-3/16 to 21-1/4.
Industry is strong, but deals spur merger talk
Strong growth in advertising demand and positive consumer reactions to this summer's slate of Hollywood films and TV's summer phenomenon "Survivor," has made rosy the outlook for media markets, analysts said.
But at the heart of today's media rally was the news that Seagram, one of the biggest players in the global entertainment scene, may finally be moved at a healthy premium to its current stock price.
"Whenever you see M&A (merger and acquisition) activity either rumored or announced, comparable companies in that industry tend to react," said Frederick Moran, media analyst at Jefferies & Co. "In this case, Seagram is huge - it has sweeping consolidation implications for the whole group."
The transaction, which could value Seagram at around $37 billion in stock and debt, is a direct reaction to other recent deals, including the recent $50 billion merger of Viacom Inc. (VIA: Research, Estimates) and CBS Corp., and the pending merger of America Online and Time Warner, analysts said, as the industry rushes to match programming and content with online and offline distribution channels.
"It also comes on the heals of AOL-Time Warner and the Terra Networks merger with Lycos, and shows that the Internet and media landscape is getting increasingly competitive, requiring more consolidation," Moran said.
Still deals that could be done
Despite the fact that most of the entertainment industry's biggest players are already paired up, industry experts said there are still deals that could be very favorable to those involved.
"Disney has yet to find a partner, News Corp. has yet to find a partner, and Viacom-CBS could go one step further and find an Internet partner," Moran said. "So the entertainment giants are well-positioned to be part of an internet and media consolidation phase."
Several potential deals have been rumored for months. For example, Viacom, now the owner of the CBS network and cable gems including Nickelodeon and MTV, has reportedly been in talks with Chris-Craft, the former boat builder that owns TV stations in key cities including Los Angeles, San Francisco and Phoenix.
 Looser rules on the number of stations media companies can own in large markets have made Chris-Craft a takeover target.
J.P. Morgan analyst Rich Macdonald suggests that Disney's ABC network would be a prime suitor for Chris-Craft's 10 stations.
"Unlike Viacom, which would likely see some regulatory resistance to the deal," due to federal limitations regarding station ownership, "Disney could easily make the acquisition," he said. "ABC is a very clear and needful buyer of TV stations."
Such a deal would give Disney dual stations in the top two media markets in he nation, and give Disney stations that reach 30 percent, up from 24 percent, Macdonald said.
Disney is party to perhaps the most fabled, and perhaps most unlikely, new media-Internet deal: a merger of the so-called "Mouse House" and Yahoo! Inc.
Experts say that Yahoo!'s 50 million monthly visitors would give Disney nearly three times the traffic than its struggling portal Go.com. Conversely, Disney could extend its content, which includes kids activities, movie previews, and ABC News programming, to Yahoo!'s consumers.
So far, neither company has gone on the record with any comment about the rumors.
Analysts also point to potential deals between News Corp. and Internet company or an American cable or satellite television company, and reports that Viacom is thinking of buying back the 36 percent of radio broadcasting giant Infinity that it doesn't already own. 
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