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Good afternoon, I’m Dylan Byers.
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Welcome back to In The Room, my biweekly private email on the inner workings of the media industry.
Today, in advance of the Memorial Day weekend, I chatted with my partner William D. Cohan, a former M&A banker and Puck’s senior Wall Street correspondent, about all the latest tectonic shifts rearranging the media-entertainment-tech landscape: Brian Roberts’ fantasy M&A thesis, Warren Buffett’s $2.6 billion Paramount arbitrage, and David Zaslav’s next moves. That conversation, and more, below.
P.S. As a reminder, you’re receiving the free version of In The Room at {{customer.email}}. For full access to Puck, and to each of my colleagues, click to subscribe here.
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William D. Cohan: So, Dylan, maybe we could start this dialogue with you sharing with Puck readers what else you have learned about the intriguing idea that you reported last week: that Comcast gave serious consideration to merging its NBCU subsidiary with EA Sports, the large gaming company. What’s the latest with this deal, especially since EA, as you’ve said, has basically put itself up for sale?
Dylan Byers: It’s a privilege to talk about media M&A with you Bill, especially since you see the Wall Street side of these deals so clearly. On that note, I was hoping you might help clarify my thinking on the recent, failed negotiations between Comcast and Electronic Arts. As I reported, Comcast chief Brian Roberts recently approached EA with a proposal to merge the video game company with a spun-off NBCUniversal. In the scenario that was under negotiation for several weeks, Roberts would have maintained control of the combined entity, EA chief Andrew Wilson would have served as C.E.O. of the combined entity, and NBCUniversal chief Jeff Shell would have moved to a new role at Comcast.
I understand the logic behind the deal from Roberts’ perspective: NBCU needs greater scale, and worthwhile acquisition targets—Fox, WarnerMedia, Activision—are quickly coming off the table. Meanwhile video games are a rapidly growing business and an increasingly important piece of the streaming strategy (there’s little wonder why Netflix is investing so heavily in the space). I also understand how, if you’re EA, and you’re looking at Microsoft’s $69 billion Activision acquisition, now seems like a particularly opportune time to strike a deal. As I also reported, EA has pitched itself to Disney, Amazon and Apple in recent months.
The piece of this that wasn’t entirely clear to me when I filed my first report was why the deal fell apart. This week, I picked up two bits of intel that help to explain that. First, EA’s stock price went up and the premium narrowed. Apparently EA went back to Comcast and asked for a higher premium, and Roberts wouldn’t budge on the apparent retrade. So EA walked away… for now, anyway. I suppose if the stock price goes back down, the two sides could come back to the table, especially given the macroeconomic climate. But the other thing I was told, which may preclude future talks, is that Wilson gave a presentation to Comcast about his vision for the combined company that failed to win everyone over and raised doubts about whether he should be the C.E.O. (Neither Comcast nor EA commented on this.)
Anyway, leadership questions aside, do you see the logic to this deal? And where do you think EA might land, if not with Comcast?...
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