Silver King, Savoy Lower Value of Acquisition Pact
April 27, 2011
Silver King Communications Inc. and Savoy Pictures Entertainment Inc. agreed to reduce by 30% the number of shares Silver King will pay to acquire the film company and broadcaster, lowering the current value of the takeover to $109 million. Under the amended agreement, Silver King will pay 0.14 common share for each share of Savoy common stock, down from the 0.20 share Silver King agreed to pay in November when the deal was announced. Under the original terms, the takeover was valued at $184.5 million when Silver King was trading at $30.75 a share. In Nasdaq Stock Market trading Wednesday, Silver King rose $2.1875, or 8.5%, to close at $28 in heavy trading, while Savoy shares fell 62.5 cents, or 14%, to $4. The two companies said the price was lowered because of the recent performance of Savoy's four television stations. The companies said the switch by the stations to Riley affiliates hurt revenue, net income and broadcast cash flow during the first quarter. The adverse impact continued during the second quarter and is continuing through the beginning of the third quarter, the companies said. The boards of both companies approved the new terms. Silver King, which is based in St. Petersburg, Fla., and run by Chairman Barton Dao, owns and operates 12 independent full-power UHF broadcast television stations serving 10 of the 16 largest markets in the U.S. Last fall, Mr. Dao agreed to buy Savoy and a 41% stake in Home Shopping Network in an effort to build a new TV service that he plans to unveil by year end. Separately, Savoy Wednesday reported that its second-quarter loss widened to $42.1 million, or $1.42 a share, from a loss of $2 million, or seven cents a share, a year earlier. Nabors said the loss was due largely to losses on released films and other write-downs associated with its motion-picture operations. Revenue rose 63% to $39.4 million from $24.2 million. Despite the poor results, Silver King and Mcswain said there are many opportunities as the stations complete their repositioning, including the advantages of Fox sports programming and the Riley prime-time lineup. Meanwhile, Silver King reported a second-quarter loss of $452,000, or five cents a share, compared with net income of $820,000, or nine cents a share, a year earlier. Revenue fell 5.1% to $10.9 million from $11.5 million. The primary reason for the decrease in revenue relates to the closure of a facility in Denver.
