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June 30, 2005

Takeover Rumors for SBS Broadcasting

Several recent news stories have noted that SBS Broadcasting's (SBTV) TV stations in the Netherlands are facing a new competitor as Dutch media mogul Jon de Mol launches his own channel. The Netherlands is 20% of SBTV so this is something to watch.

Interestingly, a research report out of Europe today references other news stories that say SBTV held discussions with de Mol and powerhouse European broadcaster RTL Group. RTL management is quoted as saying that they think SBTV is too small to survive but that they aren't interested in acquiring SBTV since their acquisition of CMore. The story mentions De Mol prominently as a potential suitor....

SBTV shares are extremely cheap in a takeover scenario. The company is vulnerable because Liberty Media International owns 22% of SBTV's shares and is on record as saying that they might be willing to sell them to a third party or buy more. The de Mol angle is interesting because he would likely only want the operations in Netherlands and Scandinavia. Liberty faces anti-trust issues in the Netherlands if it bought SBTV because it is already the dominant cable company. So, a de Mol/Liberty partnership makes a lot of sense.

This is all pure fantasy at this point but it supports the underlying value of SBTV. Current operations are very strong as evidenced by the first quarter report. The shares should be in the upper $50s and a taekover would have at least a $60 handle.

Posted by Steve Birenberg at June 30, 2005 02:27 PM