English Entertainment
FDI ruling puts spoke in Murdoch’s China plans
MUMBAI: Rupert Murdoch had put big bet on China, a market which he fancied would soon take over as the fastest-growing in the world with its sheer size of eyeballs.
Just as he was planning to step up further investments, the Chinese government has decided to tighten control of foreign participation in the local TV industry.
On 12 July, China’s broadcast regulator State Administration of Radio, Film and Television (Sarft) came up with a regulation that puts a serious spoke in Murdoch’s China script. Sarft’s aim: to ban city and provincial broadcasters from co-operating with multi-national media companies on joint venture channels and equity alliances.
According to the regulation, local TV and radio stations should not rent their channels to foreign companies and also should not cooperate in funding and operating radio and TV channels with foreign organisations. It also bans any co-operation with foreign companies in the broadcast of regular and live programmes.
Other kinds of co-operation with foreign companies should first be approved by Sarft’s provincial branches, China’s official Xinhua News Agency reported. Four months ago, Sarft issued a circular to make clear that foreign companies should not be involved in operating TV and radio channels, although it allowed foreign companies to set up joint ventures in TV, film and radio programme production.
How does this impact Murdoch’s News Corp? Qinghai TV, a provincial broadcaster, has abandoned plans to partner with News Corp in an equity-based TV alliance to broadcast nationally Chinese-language programming, local reports said.
According to Hong Kong-based Media Partners Asia (MPA), Sarft apparently has refused to approve the transaction, leaving News Corp in a fairly precarious position. “On a consolidated basis (excluding Phoenix and ESPN-Star Sports), Star, we estimate, is losing around $10-15 million a year in China. However, our estimates indicate that it could deliver total operating profits of $109 million in FY 2005, driven substantially by cash flow in India,” the report says.
Star has legal penetration only in Guangdong ($300 million TV ad market) with 100 per cent owned Xing Kong and 37.6 per cent-owned Phoenix Satellite TV, according to MPA.
Sarft’s regulation will have a negative impact on foreign investments in China. It may be recalled that Murdoch had, as part of an earnings conference call in February, said: “We’ve just taken an investment in a new venture which we’ll be talking about more, where we’ll have 50 per cent, I think, of a prime-time channel, which will have access to well over 100 million homes. That’s yet to come.”
The scenario has now changed. And the bad news Murdoch hears from China could turn out to be good for India. The question we are asking is: Will he up his investments in India, realising that China may have bigger growth opportunity but is a very tough market to crack with regulations that hinder growth? Or will he continue his dogged pursuit? Perhaps, he will let us know soon.
English Entertainment
Warner Bros. Discovery shareholders approve Paramount deal
Investors wave through a $111 billion megamerger but deliver a stinging, if toothless, rebuke over half-a-billion-dollar goodbye packages
NEW YORK: The shareholders said yes to the deal. They said no to the cheque. At a virtual special meeting on Thursday that lasted barely ten minutes, Warner Bros. Discovery investors voted overwhelmingly to approve Paramount Skydance’s $111 billion acquisition of the company — and then turned around and voted against the lavish exit pay packages lined up for chief executive David Zaslav and his fellow outgoing executives.
Not that it will make much difference. The compensation vote is purely advisory and non-binding. The Warner Bros. Discovery board can, and almost certainly will, pay out as planned.
But the symbolism stings. It is the second consecutive year that WBD shareholders have voted against the executive compensation packages, and this time they had good reason. Zaslav’s exit deal is, by any measure, extraordinary. Under the terms filed with the Securities and Exchange Commission, he is set to receive $34.2 million in cash severance, $517.2 million in equity in the combined company, and $44,195 in continued health coverage — a total of at least $550 million. On top of that, Warner Bros. Discovery has agreed to reimburse Zaslav up to $335 million for taxes assessed by the Internal Revenue Service on his accelerated stock vesting, though the company says that figure will decline depending on when the deal closes. As of March 11, Zaslav also held $115.85 million in vested WBD stock awards — and last month sold a further $114 million worth of WBD shares.
Shareholder advisory firm ISS recommended voting against the compensation measure, citing “problematic” tax reimbursements to Zaslav and the full vesting of his stock awards.
Zaslav will be bound by a two-year non-competition covenant and a two-year non-solicitation of customers and employees after the deal closes.
His lieutenants are not walking away empty-handed either. J.B. Perrette, chief executive and president of global streaming and games, is in line for $142 million, comprising $18.2 million in cash severance and $123.9 million in equity. Bruce Campbell, chief revenue and strategy officer, will receive an estimated $121.5 million, including $18.8 million in severance and $102.7 million in equity. Chief financial officer Gunnar Wiedenfels is set for $120 million, made up of $6.6 million in cash severance and $113.1 million in equity. Gerhard Zeiler, president of international, will get $82.6 million, including $11.9 million in severance and $70.7 million in equity.
The deal itself, clinched in February after Netflix declined to raise its bid for Warner Bros., still needs regulatory clearance from the Justice Department and European authorities. Several state attorneys general are also weighing legal action to block it.
Senator Elizabeth Warren, Democrat of Massachusetts, was unsparing. “The Paramount-Warner Bros. merger isn’t a done deal,” she said after the shareholder vote. “State attorneys general across the country are stepping up to stop this antitrust disaster. We need to keep up this fight.”
If it does go through, the combined entity would be a formidable beast, bringing together Paramount Skydance’s stable — CBS, CBS News, Paramount Pictures, Paramount+, BET, MTV and Nickelodeon — with WBD’s portfolio of HBO, Max, Warner Bros. film and TV studios, DC, CNN, TBS, TNT, HGTV and Discovery+. Paramount has said it expects $6 billion in cost savings from the merger, which is Wall Street shorthand for mass layoffs on a significant scale.
The ten-minute meeting was presided over by chairman Samuel Di Piazza Jr., with Zaslav, Campbell, Wiedenfels and chief communications officer Robert Gibbs in virtual attendance. Di Piazza was bullish. “We appreciate the support and confidence our stockholders have placed in us to unlock the full value of our world-class entertainment portfolio,” he said. “With Paramount, we look forward to creating an exceptional combined company that will expand consumer choice and benefit the global creative talent community.”
Zaslav echoed the sentiment. “Over the past four years, our teams have transformed Warner Bros. Discovery and returned the company to industry leadership,” he said. “Today’s stockholder approval is another key milestone toward completing this historic transaction that will deliver exceptional value to our stockholders.”
Paramount Skydance struck a similar note. “Shareholder approval marks another important milestone towards completing our acquisition of Warner Bros. Discovery,” it said in a statement, adding that it looked forward to “closing the transaction in the coming months.”
The shareholders have spoken on the merger. On the pay, they were ignored before the vote was even counted.
