Sony Goes All In With Deal For Game Show Network -- WSJ
November 19 2019 - 3:02AM
Dow Jones News
By Benjamin Mullin
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (November 19, 2019).
Sony Corp.'s Sony Pictures Entertainment is buying AT&T
Inc.'s stake in Game Show Network for $380 million, a deal that
will make Sony the sole owner of the U.S. cable channel.
The purchase of AT&T's 42% stake implies a valuation of
about $905 million for Game Show Network, a cable channel that airs
quiz show staples like "Family Feud" and "Deal or No Deal"
alongside classics like "Match Game."
The network will continue to be carried by AT&T's DirecTV
service, according to a person familiar with the matter. Game Show
Network will continue to be operated by Sony Pictures Television,
which will add Game Show Network's catalog of shows to its library,
Sony said in a statement.
Game Show Network Chief Executive Mark Feldman will continue
running the channel.
Doubling down on a cable channel cuts against the grain in a
media environment where many consumers are ditching traditional pay
TV service in favor of online video streaming services like Netflix
and Amazon Prime Video. Other entertainment companies such as Walt
Disney Co. are focusing their investments on their own subscription
streaming services.
But Sony executives are confident that Game Show Network will
continue delivering profits well into the streaming era, according
to a person familiar with their thinking.
About 90% of Game Show Network's revenue comes from advertisers,
with only a small slice from the channel-carriage fees paid by pay
TV providers, the person said. That gives Game Show Network some
cushion in a media landscape where providers are trying to cut
programming costs, the person said.
The audience demographics for Game Show Network also make the
channel durable, despite cord-cutting, Sony said. The viewership
skews older and is more inclined to watch traditional TV, and
almost all of Game Show Network's audience watches live, which
makes the advertising more effective, the company said.
AT&T is receiving $500 million in cash in connection with
the deal, reflecting about $120 million in cash on the books of
Game Show Network that AT&T is keeping in addition to Sony's
$380 million payment.
Included in the deal is GSN Games, a division of Game Show
Network that produces casual games for mobile users. The division's
revenue comes mostly from players who make in-app purchases while
they're playing free games, according a person familiar with the
matter. Some games on offer correspond to shows on the Game Show
Network cable channel, including "Wheel of Fortune."
The deal comes as AT&T is selling assets the company deems
nonstrategic to help pay down debt from its 2018 purchase of Time
Warner for more than $80 billion. AT&T sold its 9.5% stake in
Hulu to Disney for $1.43 billion in April. In October, the telecom
giant agreed to sell its Puerto Rican and U.S. Virgin Islands
businesses to Liberty Latin America Ltd.
AT&T is pinning its ambitions in the video-streaming space
on HBO Max, a $14.99-a-month service that will launch in May and
will include programming from across the WarnerMedia empire.
AT&T is spending big to fill HBO Max with attractive shows. It
paid about $600 million for the rights to stream "South Park" for
five years and has lured directors such as J.J. Abrams with
big-ticket production deals.
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
November 19, 2019 02:47 ET (07:47 GMT)
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