ME TAS Overview 20 March 2015
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Transcript of ME TAS Overview 20 March 2015
Page 2 Global Media & Entertainment Transaction Advisory Services
EY Transaction Advisory Media & Entertainment Leaders
Name Title Country Telephone Email
Thomas J. Connolly Global Media & Entertainment Transaction
Advisory Services Leader
United States +1 212 773 7146 [email protected]
Carolyn Barr Executive Director, Transaction Support United States +1 212 773 3562 [email protected]
Dan Buchler Partner, Transaction Support United States +1 213 977 7654 [email protected]
Karl Cheng Partner, Strategy United States +1 6174786372 [email protected]
Fabio Guerra Pires Partner, Transaction Support Brazil + 55 11 3055 0129 [email protected]
William Fisher Partner, Transaction Support United Kingdom +44 207 951 0432 [email protected]
Atul Mehta Partner, Transaction Support India +91 22 6192 0210 [email protected]
Javier Rovira Senior Manager, Lead Advisory Argentina +54 11 4875 4716 [email protected]
Ajay Shah Partner, Lead Advisory India +91 22 6192 0640 [email protected]
Paul F. Sheahen Partner, Transaction Tax United States +1 212 773 5578 [email protected]
Dorian S. Swerdlow Principal, Operational Transaction Services United States +1 212 773 6179 [email protected]
Alan Wallis Executive Director, Valuation & Business Modeling United Kingdom +44 207 951 3742 [email protected]
Stefan Wojcickyj Executive Director, Valuation & Business Modeling United States +1 212 773 3733 [email protected]
Bryan Zekulich Partner, Transaction Support Australia +61 2 9248 5833 [email protected]
Ben Kwan Greater China Leader China/Hong Kong +852 2849 9223 [email protected]
Name Title Country Telephone Email
John Nendick Global Media & Entertainment Sector Leader United States +1 213 977 3188 [email protected]
Howard Bass Global Media & Entertainment Advisory Leader United States +1 212 773 4841 [email protected]
Ian Eddleston Global Media & Entertainment Assurance Leader United States +1 213 977 3304 [email protected]
Alan Luchs Global Media & Entertainment Tax Leader United States +1 212 773 4380 [email protected]
Global Media & Entertainment Leaders
Page 3 Global Media & Entertainment Transaction Advisory Services
EY’s M&E Transaction practice is addressing challenges with a dedicated and integrated global team
EY’s globally dedicated M&E TAS practice has 400 professionals meeting clients' needs across:
Acquisitions Market analysis Divestitures Strategic planning
Valuation and modelling Working capital Integration Real estate
Americas
122 M&E Transaction practitioners
EMEIA
234 M&E Transaction practitioners Asia-Pac,
Australia, Japan
36 M&E Transaction practitioners
A global team that leverages our
extensive firm-wide skills in tax,
assurance, process improvement,
risk management, human capital,
and lead advisory
Page 4 Global Media & Entertainment Transaction Advisory Services
EY’s select public and privately-held global media and entertainment clients
Film, TV, gaming and
music
Electronic Arts
Lions Gate Entertainment
MGM
Sony Pictures Studios
Twentieth Century Fox
Universal Music Group
The Walt Disney Studios
Warner Music Group
Dalian Wanda
Publishing and information
services
Advance Publications
Associated Press
Bloomberg
Lagardere Groupe
McGraw Hill Financial
New York Times
News Corp
Pearson
Thomson Reuters
Sports, live events and
theme parks
Fédération Internationale de
Football Association (FIFA)
Formula One
Live Nation
Union Cycliste International
Union des Associations
Européennes de Football
(UEFA)
Zuffa
Broadcast and cable
networks and online video
ABC Television Network
BBC
Fox Broadcasting Company
Grupo Televisa
HBO
Mediaset
Netflix
RTL Group
Advertising and
measurement
Clear Channel Outdoor
Dentsu
InterPublic Group
JC Decaux
Omnicom Group
Publicis Groupe
Vision 7 International
WPP Group
Cable and satellite
operators and MVPDs
British Sky Broadcasting
Comcast Corporation
DirecTV
Liberty Global
Quebecor
Shaw Communications
Time Warner Cable
Virgin Media
Diversified M&E Companies
21st Century Fox
Bertelsmann
Comcast Corporation
Sony
Time Warner
Vivendi
The Walt Disney Company
Alibaba
Page 5 Global Media & Entertainment Transaction Advisory Services
As executives and owners focus on the future they are asking…
Raising
Are we effectively monitoring market conditions to exploit
opportunities to refinance debt or raise equity?
Are our funding sources optimized to build resilience and
maximize optionality?
Do we want to divest any non-core assets
and are we prepared to optimize value
and timing?
Investing
Have we increased the speed and quality of decision
making in our investment appraisals?
Are we maximizing value creation by aligning
management incentives, integration planning and
addressing other post-deal SPA concerns?
How do we manage the risks and rewards of
investing in emerging markets?
Preserving
Do we have the optimal capital structure
to meet our medium-term strategic priorities?
Are we effectively managing our cash across
the enterprise, and do we understand our future
cash needs?
Are we effectively monitoring and controlling risk across our
critical value chains and with our customers?
Optimizing
How is our capital being deployed across
geographies and business units to ensure the
right strategic presence in key markets?
Are any of our assets under-used or under-performing?
Are there opportunities for us to reduce costs, increase
efficiencies, reduce risk, and improve transparencies by
optimizing our tax and legal entity structure?
Page 6 Global Media & Entertainment Transaction Advisory Services
…and EY’s Transaction practice advises and helps pursue a course of capital agenda actions
Fundraising (equity and debt) – IPO readiness, rights
issues, PE, private placement and capital markets
Optimizing funding structures
Asset divestment
Tax-free spins and carve outs
Cost- and tax-efficient structures
Acquisitions and alliances
Planning and structuring transactions to
optimize stakeholder return
Focused due diligence to mitigate risk
and drive value
Asset valuations
Cost- and tax-efficient structures
Stress and distress – e.g., liquidity
issues and turnaround plans
Customer and supplier analysis
Preserving tax assets and minimizing costs
Refinancing or restructuring debt, equity
and other obligations
Dealing with stakeholder relationships
and pressure
Dispute resolution
Optimizing asset portfolio
Realize synergies and effective
integration
Improving working capital and
releasing cash
Optimizing capital structure
Optimizing tax and corporate structure
Supply and distribution chain
optimization
Page 8 Global Media & Entertainment Transaction Advisory Services
Multi-billion dollar global MVPD transaction required pre-deal diligence and accounting harmonization
A large global MVPD was acquiring a leading UK telecommunications company in a
multi-billion dollar acquisition. The acquiring company needed to complete diligence and
understand the impact of financial consolidation in a very short timeframe.
Evaluated the underlying performance of the target’s business, including adjusting its operating cash flow and free cash flow to the acquirer’s definitions
Quantified accounting policy differences between the two businesses
Analyzed the complex debt structures of the target along with publicly-available information and target company data to show the debt and debt-like position of the target’s business
Analyze the current trading and outturn of the target
The global EY team combined a skilled due diligence team and sector experience with
US GAAP and SPA specialists to address key financial issues for the acquirer. EY’s work
provided the deal team with comfort, and the necessary diligence over the key issues
impacting the purchase price. All of this work was completed according to the acquirer’s
tight time schedule.
The challenge
What we did
Result
Evaluated the target’s historical and projected financial performance and identified accounting policy differences to support transaction negotiation and consolidated impact
Page 9 Global Media & Entertainment Transaction Advisory Services
Acquisition of a world famous film production company required buy-side due diligence and deal structuring
The studio arm of a leading M&E conglomerate wanted to acquire a film production
company. The target company had several business lines with complex licensing
arrangements. Certain historical factors, as well as the purchase agreement structure,
elevated the deal’s risk profile. The acquirer wanted to get a fuller understanding of the
activities of the target’s various business units. Finally, because both companies are
well-recognized brands, there was heightened scrutiny by the board, the media
and shareholders.
Performed buy-side due diligence on the target company, and pre-acquisition purchase accounting analysis
Analyzed key accounting areas and operating results for each of the target’s business lines
Analyzed separation considerations and tax implications with respect to businesses/assets not included in the transaction
EY’s work gave the buyer greater confidence in completing the deal. The EY team
ensured that the target’s accounting was accurate and consistent with the acquirer’s. EY
gave the acquirer greater understanding of the profitability of the target’s business units,
helping it assess the implications of its post-close business model for the target.
The challenge
What we did
Result
Provided greater visibility into target’s business, reducing deal risk
Page 10 EY Media & Entertainment Advisory Services for content and information services companies
EY leads integration and divestiture activities of industry-changing merger
Integration and Divest (PMO) and work stream support for the Business Services segments of two large cable companies
The challenge
This large cable MSO is acquiring one of its peers. Both companies are seeing rapid growth in
their Business Services segment (telephony and broadband to the SMB market). However, the
acquirer’s business services segment relies on its residential business for almost all of its
functional and network support. It sees the integration of the two companies’ operations as a
catalyst to begin the process of building a support organization for Business Services. The
company is seeking to choose the “best of breed” of the two companies systems, processes
and technologies. Adding to these challenges was the fact that the client, the target and a third
MSO will be swapping assets. Additionally, to satisfy regulators, the client is doing a tax-free
spin-off of 3 million customers into a new company (Spinco).
What we did
EY supported the company’s PMO for both the Integration and Divestiture activities:
Coordinated overall development efforts, prioritized projects and work through resourcing/conflict resolutions .
Responsible for technical management and analysis of large data sets moving in/out of the company. This included territory information, subscribers analysis, market research & financial information. Was the “go to” expert on the location, status & accessibility of this info.
Supported Work stream leads in development & tracking of business cases/cost models of each work stream.
Led analysis of revenue and cost synergies (& dis-synergies) resulting from the transaction. Was the subject matter resource on financial impacts of changing operating models, staffing levels, consolidation, etc.
Result
By serving in the PMO function, EY helped the companies successfully integrate and
divest all components of the transaction, hit the established revenue and cost
synergy targets and mine through data elements.
Page 11 Global Media & Entertainment Transaction Advisory Services
EY leverages global network to find a strategic buyer
This leading Indian multi channel network (MCN) on Youtube had profitable operations.
The MCN space was very attractive to private equity investors globally. However,
because of a passive investor owning significant majority, it was difficult to do a PE
transaction. Given that there were no large strategic players in the space in India and
given the size of the asset, cross border strategic deal was a challenge. EY was
mandated to provide an exit to the existing investor and also raise additional capital for
growth.
EY used its global network and relationships to identify a list of synergistic strategic players.
EY conducted a roadshow of the company with investors in US and Canada and shortlisted an investor for a exclusive process.
Acquirer’s parent entity was a multi billion dollar media conglomerate and EY played an important role in convincing the parent of the niche value proposition of the company in global MCN space.
EY’s work gave the acquirer greater confidence in completing the deal. The EY team
ensured that the acquisition of the target was showcased as the perfect fit for the long
term vision of the buyer. EY also gave the acquirer greater understanding of the
profitability of the target and its operating metrics which convinced them of the stability
and growth potential of the target going forward.
The challenge
What we did
Result
Showcased long-term growth prospects of target to ensure its sale
Page 12 Global Media & Entertainment Transaction Advisory Services
Investment in mobile game company required buy-side tax and financial due diligence
A Chinese media conglomerate wanted to take an equity stake in a US-based
mobile gaming company. As this was one of the company’s first investments in
the US, it was unfamiliar with many of the processes involved. Also, the target
company had grown rapidly in recent years, but having been in operations for a
only few years, there was little in the way of historical financials to analyze.
The EY team provided financial and tax due diligence.
EY analyzed the potential tax implications of the investment.
EY performed traditional financial due diligence on the target’s recent financials. However, as the company (and industry) is relatively new, the EY team also analyzed the assumptions and operating metrics that comprised the target’s forecast model. The team examined the target’s users’ behavior and content pipeline to ensure that current growth rates would be sustainable over the longer term.
EY’s work gave the buyer greater confidence in making the investment. The EY
team helped the investor understand the target’s business better gain greater
comfort in the target’s forecasts and identify deal risks.
The challenge
What we did
Result
Provided greater confidence in the target’s industry and financial forecasts
Page 13 Global Media & Entertainment Transaction Advisory Services
Divestiture required understanding the entity’s quality of earnings and potential market positioning
Prepared pro forma standalone financial statements for the entity to determine its quality of earnings.
Analyzed the operational organization, identified the points of entanglement with the parent and supported the development of a cost structure on a standalone basis.
Provided insights with from EY’s Parthenon group to assess the market positioning of the business in a potential sale process.
EY’s work provided a view of the entity on a standalone basis that significantly contrasted
with the parent’s view. As a result of our findings, the board decided to halt the sale
process and focus on internal reorganization and areas of improvement we identified
during the engagement.
The challenge
What we did
Result
Provided greater visibility into the potential divestment process
A multi-billion dollar global company in the education sector was considering the sale of
an entity—the sale of which would reshape the company’s organization and market
focus. A series of restructuring activities meant that the entity was highly dependent on its
parent for a variety of support functions, obscuring its true cost structure. As a result, the
company had limited visibility into the potential financial performance of the entity as a
standalone business. Additionally, the management team had limited experience in
transformational and complex divestments.
Page 14
Global content deal required financial due diligence and tax structuring
Provided financial due diligence and tax structuring
The challenge
An Australian pay TV service and global television network teamed up to buy a free-to-air TV station in Australia. The deal creates a number of content and advertising synergies.
What we did
We were asked by the JV partners to perform financial and tax due diligence:
EY performed financial due diligence on the target. This included understanding the target’s declining historical trading and challenging the forecast turnaround assumptions.
EY provided tax structuring to ensure that the deal was structured in the most tax-efficient manner.
EY reviewed the synergy model of one of the venture partners to better understand the target’s key metrics and likely synergies from the deal.
Result
EY provided a thorough review of the target’s forecast assumptions and identified a number of risk areas which were used by the client to build and support their valuation model. EY also provided to the client support to react quickly and efficiently to the deal structuring put forth by the target.
Page 16 Global Media & Entertainment Transaction Advisory Services
We’re recognized as a market leader by analysts and industry professionals
Leading TAS advisor
Recognition
#1 brand for Transaction Advisory Services in India TNS Global Brand Survey 2013
Most Active Transaction Advisor Award
2014, 2013, 2012, 2011, 2010 and 2009 by
Venture Intelligence
Accountancy Firm of the Year and Financial Adviser of
the Year Central & Eastern Europe of 2014
Market leader
2014: Global M&E client work
covers more than 50% of
worldwide deal market.
Leading Infrastructure Advisor EY leads Project Finance International’s
league table
Page 18 Global Media & Entertainment Transaction Advisory Services
Thought leadership
Spotlight on China
Every global strategy
needs to include
China. Although the
challenges for M&E
companies seeking to
enter or expand their
market presence
remain significant, four
key factors can help
M&E companies
succeed.
M&E Global Capital
Confidence
Barometer
The study highlights
the results of a survey
of M&E executives on
their views of the
global economy, the
capital markets and the
transaction
environment.
The timely and topical pieces below are designed to help clients understand the big industry issues, and how those issues can impact their capital agenda. We provide valuable insights that will help you raise, invest, optimize, and preserve
The Future of TV
We have identified six
major trends that we
think help tell the story
about the future of
television and what it
means for media and
entertainment
companies. We also
discuss how they can
prepare for a world
where consumers are
in control.
2014 CFO Study –
It’s Showtime!
Digital drives the
agenda, data
delivers the insights
Interviews conducted
with 50 leading CFOs,
representing
companies with
combined revenue of
over US$475 billion,
who provide a global,
multi-sector
perspective.
Sustaining digital
leadership
Offers insights on digital
growth strategies,
business models and
methods of customer
engagement that
companies are
executing to pursue and
sustain M&E sector
leadership.
Riding the new
wave – Are you
ready for accelerated
digital media
adoption?
This report helps
answer four questions
for M&E executives
considering digital
growth in international
markets related to:
market potential; risks
and costs associated
with entry; timing of
entry; and capital
allocation.
Page 19 Global Media & Entertainment Transaction Advisory Services
Want to learn more?
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About EY
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information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the
global EY organization that also does not provide any services to clients.
How EY’s Global Media & Entertainment Center can help
your business
In an industry synonymous with creativity and innovation, the bar for
business excellence is set high. You need to embrace new technology,
develop new distribution models and satisfy the demands of a voracious
and outspoken consumer. At the same time it’s important to manage
costs, exceed stakeholder expectations and comply with new
regulations. There’s always another challenge just around the corner.
EY’s Global Media & Entertainment Center can help. We bring together
a high-performance, worldwide team of media and entertainment
professionals with deep technical experience in providing assurance, tax,
transaction and advisory services to the industry’s leaders. Our network
of professionals collaborate and share knowledge around the world, to
provide exceptional client service and leverage our leading market share
position to provide you with actionable information, quickly and reliably.
© 2015 EYGM Limited.
All Rights Reserved.
1502-1410034
ED 0115
This material has been prepared for general informational purposes only
and is not intended to be relied upon as accounting, tax, or other
professional advice. Please refer to your advisors for specific advice.
www.ey.com