Magazine article Variety

Firm Puts a Pricetag on Dealmaking in Film Biz

Magazine article Variety

Firm Puts a Pricetag on Dealmaking in Film Biz

Article excerpt

COST CONTROL

Companies look to Salter Croup to determine what assets are worth

The Salter group, best known for its valuation work on some of Hollywood's largest transactions, found itself at the center of its own M&A deal earlier this year when advisory firm FTI Consulting bought a majority stake in the Century City-based company. Already a global business with 3,915 employees worldwide, FTI needed something very specific: entertainment expertise.

Based in Baltimore, FTI offers many of the services one would expect from an international consulting firm with more than $1 billion in annual revenue: investigations, litigation, mergers and acquisitions, regulatory issues, reputation management, strategic communications and restructuring. But advising Hollywood as it grapples with new distribution platforms, piracy and digital issues is a big business, and FTI wanted in.

Everyone from the major studios to individual producers is struggling with how new distribution platforms are shaking up traditional ones, and the Salter Group has made its name by helping them figure out the impact on the business: How much will a library be worth over time? How greatly are companies like Netflix eroding the pay television window? How much will a film be worth in international television if you can access it for free online?

"I think the margin of error has gotten smaller," said Bob Osher, president of Sony Pictures Digital Prods. Osher has known partners Roy Salter, Patrick Russo and Eric Briggs since they founded the firm in 2003, and has dealt with them on a number of transactions at Sony. "It used to be that if you bet wrong on the asset, or your analysis was a little flawed, you could realize the value in many different places." Today, with changing platforms that can blur business strategies, getting things right initially is more of an imperative.

The Salter Group may now operate under FTI Consulting, but the company continues to have a hand in almost every major entertainment transaction. Over the past decade, Salter Group says it has advised on more than 1,350 projects that have a combined value of $145 billion. The firm's clients have included Legendary Pictures, the Walt Disney Co. and Sony, as well as New Regency and Lakeshore Entertainment.

"The Salter Group has provided services to Lakeshore and its lenders for more than 10 years in a variety of capacities, said Lakeshore founder and chairman Tom Rosenberg. "We value their expertise and industry insight."

Their clients also include people looking to enter the business and those looking to exit it. A producer might seek advice on whether to sell a stake in a movie project, or a private equity firm might want help determining whether to invest in a new production company.

As credit markets continue to unthaw from the 2008 financial crisis, wary bankers need reliable assessments of the assets they lend against.

A big part of that is determining how much a library's value has been realized on existing platforms, and how much remains to be gleaned from emerging ones. The sale of Miramax was an example to many industryites of how new digital distribution models and growing overseas television markets can revive older content. Disney sold the library in 2010 for $663 million. After inking numerous new distribution deals, it received a valuation of more than $800 million a year later. …

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