After the markets had closed on the eve of the USA Thanksgiving weekend, the LA Times reports that “Deluxe Entertainment Services Group said Wednesday it has reached an agreement to acquire the bulk of Ascent Media Group, the Santa Monica-based postproduction company, for $68 million”
We understand that the purchase price has been allocated as follows: 79% to the U.S. businesses and 21% to the U.K. businesses. In America Ascent Media owned Company 3, Method, Encore Hollywood, and Level 3 Post, (amongst others) and in London,- Rushes and Ascent 142.
The Hollywood Reporter is publishing that Ascent-owned Company 3 colorist Stefan Sonnenfeld (Alice in Wonderland, Pirates of the Caribbean: On Stranger Tides,) “will remain with the company”. Deluxe-owned EFILM, already has a very strong reputation built on senior colorists such as Steve Scott (Iron Man 2, Julie & Julia).
The acquisition includes Ascent’s facilities in Burbank, Hollywoood and Santa Monica that employ 1,800, as well as operations in the U.K. Ascent said it would retain its content distribution business, which includes providing satellite transmission services to broadcasters and networks.
Ascent Media was formely part of Discovery Communications until it was spun off as a separate company in 2008. “Its holding company posted a net loss of $6.2 million on revenue of $204 million for the six months ending June 30, narrowed from a net loss of $13.7 million on revenue of $230 million for the same period a year earlier”, reported the LA Times.
When last Assent published its quarterly results William Fitzgerald, CEO of Ascent Media Corporation said. “Ascent’s year-to-date operating results have not met our expectations as uncertainty about the timing and pace of the economic recovery has led to ongoing volatility in the media marketplace,” and adding that as a consequence of the current environment is that our customers have continued to take “a cautious approach” to spending.
In the official Assent press release they commented: “Ascent Media will continue to own AMG’s content distribution and systems integration businesses. However, the Company is pursuing strategic alternatives for both business units. In addition, the Company is committed to pursuing investments in or the acquisition of businesses that provide enhanced shareholder return opportunities.”
The Deluxe transaction is subject to customary closing conditions and legal issues but is expected to close by the end of 2010.
They also purchased MikeReedPostProduction+Partners last week.
Wally.
yes they also – a few months ago – bought Post Modern in Sydney.
Makes you wonder how long Method will be around…
Chris
no mention of Beast Editorial. Are they included in the deal?
Here is a press release that includes some of the companies listed:
HOLLYWOOD, Calif., Nov. 24, 2010 /PRNewswire/ — Deluxe Entertainment Services Group Inc. announced today that it has signed an agreement with Ascent Media Corporation (Nasdaq: ASCMA) to acquire Ascent’s Creative Services and Media Services businesses, including the well-known brands of Company 3, Beast, Method, Rushes, Encore Hollywood and Level 3 Post.
The acquisition will also enhance Deluxe’s services for clients that include life-cycle library management and digital asset management. Digital services include file based mastering, archiving, digital distribution, DVD and Blu-ray authoring.
Deluxe is the world’s largest processor of film for the motion picture industry and the industry’s largest provider of Blu-ray authoring services. Over the last few years Deluxe has significantly increased its service offerings in digital services and content delivery. The company’s pipeline includes 2D and 3D post production services from film or digital capture to digital intermediates with the proprietary EFILM
We’ll find out Monday.
Looks like it’s “eat or get eaten”….
Historical perspective:
1997 – Four Media bought Pacific Ocean Post (which became Riot!, then Method) for estimated $20 million
1997 – Todd AO acquired Hollywood Digital for $31 million
1998 – Four Media bought Encore for $68.6 million
2000 – Four Media acquired Rushes, 525 and Virgin Mexico for $40 Million
These are just a few I was able to find.
It is hard to keep track of every company that got bought during that 16 year long katamari that 4MC, Liberty Livewire, Ascent pulled off.
A couple of additions to Jeff’s list:
Digital Magic (probably ‘company1’) 1994
Anderson Film Industries for $10 million in 1997
Pacific Ocean Post in 1998 for $27 million according to:
http://articles.latimes.com/1998/oct/01/business/fi-28321/3
There must have been more: Method Studios was already ‘company10’
in 1998. Later acquisitions include:
Manhattan Transfer
Filmcore
Mad River
Beast
Throw 525 Studios into the mix. It was purchased in 2000 by Ascent and quietly but quickly dissolved.
from the LA Times/blog:
“Ascent Media was formely part of Discovery Communications until it was spun off as a separate company in 2008. Its holding company posted a net loss of $6.2 million on revenue of $204 million for the six months ending June 30, narrowed from a net loss of $13.7 million on revenue of $230 million for the same period a year earlier.
Ascent Media Chief Executive William Fitzgerald attributed the losses in its most recent statement to “uncertainty about the timing and pace of economic recovery that has led to ongoing volatility in the media marketplace.””
Yikes.
Check the Creative Services numbers, particularly ETV. Not nearly as bad.
By the way for those interested the fiscal 2009 10-K filed by Ascent can be viewed online:
http://www.sec.gov/Archives/edgar/data/1437106/000095012310023798/v55445e10vk.htm
I think that there were a few other details in this story’s lineage that might be of interest. Disclaimer – Some of the stuff below is pure speculation, and some is a product of my often faulty memory.
It all started with 4MC deciding to be a consolidator of the post industry (early mid 90’s?), then Todd-AO decided to join the fray, and they too started buying up post houses and VFX companies. (starting with Digital Magic, POP, Encore). I recall that the prices paid were far in excess of those mentioned above, when the debt that was assumed by the buyers was included.
I believe that 4mc eventually bought todd ao (or was it vice versa?).
Then, in ’99, AT&T bought 4mc for $252M, and owned all of these for a short while. At that point, Liberty Media was owned by AT&T. Liberty was spun off from AT&T in late 2001. Then, Liberty Media spun off these assets to a public company called “Liberty Livewire”. You can see their sec filings, at sec.gov. I think that they merged it back in to liberty media for a few years in about 2003, so their numbers weren’t visible to the public, only in aggregate with liberty’s. They again spun it off in 2005, as Ascent media, and ascent is what exists today (or at least until last week).
There are a few other details that are missing in this tale. Although the sale price of POP and Encore are listed above, I don’t think that these include the debt that these companies held, which was significant. ($100M+)… but for a while, the balance sheet of Liberty Livewire included as an “intangible asset” $448M (!!!) of “goodwill”. (http://sec.gov/Archives/edgar/data/61442/000093639202001436/v85977e10vq.htm) I think that this is how that additional debt was recognized, though again, I could be wrong, as I’m no accountant. I think that it was something like this – the price paid for these companies was greatly in excess of their tangible values (when their debt was included), and the difference was booked as “good will”. In 2002 or so, the accounting rules changed significantly, regarding recognition of goodwill, and I recall that livewire (or whoever the holding company was at that point) had to take an enormous write down, in the low-mid 9 figure range, essentially all of that 400M goodwill figure.
From another perspective, when all of the consolidation started to take place, these individual companies were not well coordinated, and were bidding against each other – grossly underbidding each other, that is – and driving the market price down significantly. For example, Digital Magic would bid against encore, and POP for the same work (star trek was a prime example). They would all aggressively underbid each other, just to get the cash flow (or in the case of star trek, a high marquis value job). They (we) were all hemorrhaging money because of this behavior. During this period, prices for post production and visual effects crashed, and eventually so did wages and working conditions as a direct consequence. They’ve not really recovered to the levels seen before then. Of course, there are other factors at play (more suppliers of services, the capital requirements to start a facility have dramatically fallen, more trained artists available etc).
Just thought you might be interested in yet another perspective.
Wonder what the next chapter will bring. As they say, History doesn’t repeat itself; it rhymes.
Maury has revealed so much tantalizing detail. I’ll just add that I believe that in his second paragraph where it is indicated that Todd-AO bought POP, it was actually 4mc. We who were at Pacific Ocean Post at the time, when told the news in an intralevel concert were significantly hesitant to raise our cheers to the rafters, as the vision and spirit of A. Kozlowski for POP had been essential to our decisions to join POP.
Yes Rob, you’re correct – my error… 4mc did purchase Digital Magic, POP and Encore, before the merger with Todd.