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Volume 24 No. 178


Disney for its Q4 "reported higher earnings despite declines at its media network group," according to Jon Lafayette of BROADCASTING & CABLE. The company's net income rose 12% to $1.4B, or $0.77 a share, from $1.2B, or $0.68 a share, a year ago. Disney saw "big gains" from its Parks & Resorts, Studio Entertainment and Consumer Products units, while its interactive unit "turned around from a loss to a gain." ESPN had $172M less "in deferred affiliate fee revenues," which were "recognized earlier in the year." The company said that without the change in deferred affiliate revenue at ESPN, operating income "would have increased" $77M with "affiliate fee increases at both ESPN and Disney Channel and higher ad revenue at ESPN." Those gains "were offset by an increase in programming and production costs because of new rights deals and rate increases" for the NFL, college football and MLB. Disney Chair & CEO Bob Iger said, "We remained confident in ESPN's value and continued rein as the leader in the sports." Disney CFO Jay Rasulo added that excluding the impact of the deferred revenue, ESPN's operating income "would have been up in the quarter." He said, "Ad revenue at ESPN was up a solid 9% in the quarter due to an increase in units sold and higher rates. ESPN's ratings were up year-over-year driven by college football, Major League Baseball and the NFL. So far this quarter ESPN's cash ad sales are pacing up nicely" (, 11/7). At presstime, shares of Disney were trading at $68.96, up 2.7% from the close of business on Thursday (THE DAILY).

The second round of bids to buy IMG were due Thursday, according to sources familiar with the company’s sales plan. A total of 10 prospective buyers sat through IMG management presentations in the last month, but it is unclear how many of the interested buyers submitted bids Thursday. Among the groups bidding for the company are KKR, a group led by CVC Capital Partners, and joint bids from Silver Lake and William Morris Endeavor, and from CAA and TPG Capital. A spokesperson at Abernathy MacGregor, a financial PR firm working on the IMG sale, declined to comment. The bids, which come after management presentations and due diligence, will be reviewed by a top exec at Forstmann Little, the trustees of Ted Forstmann’s estate at the firm Akin Gump and the bankers working on the sale at Morgan Stanley and Evercore. They are expected to cut the list of 10 bidders to anywhere from two to six finalists. IMG is expected to attract an all-cash offer of more than $2B. According to sources familiar with its financials the company’s earnings before interest, tax, depreciation and amortization (EBITDA) increased from $146M in '11 to $175M last year, and are projected to exceed $200M this year. Forstmann Little officially put IMG on the market in August. More than 35 potential buyers signed nondisclosure agreements and expressed interest in the company. Bankers collected bids from that group in late September. Blackstone Group ran a similar, auction-style sale for AEG last year and hoped to fetch $8B for the company, but it pulled the company off the market after six months when it failed to find a bidder willing to pay the asking price. Forstmann Little had to do the same with 24 Hour Fitness when it tried to sell it earlier this year. But interest in IMG has been high, and sources said Forstmann Little and the trustees at Akin Gump anticipate closing a deal for the company before the end of the year.