Brits go All American
Pearson pays $515 million to beef up TV
As expected, (Daily Variety, Oct. 1) Pearson Plc said Wednesday it has reached a deal to acquire All American Communications for $515 million, including the assumption of $136 million in debt. All American stock rose 75 cents to $25.12 Wednesday after Pearson confirmed its plan to buy the company for $25.50 a share in a cash tender offer. The transaction is expected to close in November.
"It's an intelligent deal," said Oppenheimer & Co. analyst Alan Gould, who had valued the company at the offer price last month.
Gould said All American chairman Tony Scotti, who had built the syndicator of "Baywatch" up over the past six years into a thriving international operation, felt prices for potential acquisitions were rising too fast. As a result, he decided to sell himself, Gould said.
The offer is "a good price" Gould said. "Could they have paid another $1-2 a share more for the strategic value? Sure."
Greg Dyke, CEO of Pearson Television, confirmed Wednesday that Pearson had been looking to buy All American for nearly two years. Dyke also said the All American would be Pearson's last big-ticket TV acquisition for some time.
Pearson has been bulking up its TV holdings for the past few years, acquiring Thames Television in 1992, Grundy Worldwide in early 1995 and U.S. longform TV production outfit ACI for $40 million in late 1995.
Pearson, one of the world's largest producers of serial dramas, also owns a 24% stake in the UK's new broadcast outlet Channel 5, among other .
The deal was driven by Pearson's interest in All American's Fremantle Intl. production and distribution operation, which distributes locally produced gameshows, talkshows and sitcoms in 29 countries. All American owns the Mark Goodson Prods. library of dozens of classic gameshow formats, including "The Price Is Right" and "Family Fued."
The Fremantle operation is a "wonderful fit" with Pearson's existing international operations, particularly the gameshows produced by its Grundy Worldwide unit. But All American's domestic production and distribution operations were also attractive to a company looking to become a major player in the U.S. TV market.
"We want to be a world-class meda company and to do that, we knew we've got to get bigger in America," said Dyke. "We've wanted to get bigger but we want to do it smartly. A lot of Brits have come in and invested a lot of money in American movie and TV businesses and they've lost a lot of money. We're getting into business that we already know."
Pearson and All American will probably merge its domestic opearations under a dual Pearson/All American banner, Dyke said. No decisions regarding All American's 325 employees have been made, but few of the company's senior corporate managers, including chairman and CEO Tony Scotti, are expected to stay on.
Scotti is believed to have put off a lot of potential buyers with his asking price, which was said to be between $500 and $600 million, which translated to a maximum share price of $32. People close to the deal say both Sony and Universal were bidders but at lower prices than Pearson was prepared to pay although this could not be confirmed.
"For Pearson it makes a lot of sense. Grundy and Fremantle together is a very impressive international television business," Gould said.
Pearson was advised on the deal by Lazard Freres LLC while All American was advised by Goldman Sachs.
