Power Investor: Haim Saban talks to TBIvision

Egyptian-born entrepreneur Haim Saban has had a hand in several of the largest private-equity-backed media deals of recent years, he talks exclusively to TBI

TBI: Do you think there is still a clear rationale for investing in free-to-air television in Europe when audiences and advertising markets are fragmenting?
Yes, I believe so. But you can’t talk about free broadcasting in Europe. What’s applicable in France is not applicable in England. But free-to-air TV will still remain the main vehicle with which marketers can reach millions of people for the foreseeable future.

TBI: Are you looking at other free-to-air deals in Europe – you have been linked with ITV in the past?
Yes, we’ll be opportunistic. Believe it or not, we still like ITV, but we still think it’s expensive, which is why we’re not looking at the moment. If one day ITV decides to sell itself and the price is reasonable we will definitely be a player. But we’re also not in the business of hostile takeovers.

Do you see opportunities in the production/distribution sector?
Nothing is etched in stone; maybe there are opportunities in the production sector. At a completely different price Endemol was an interesting opportunity. I can understand why John De Mol bought back into it and can understand that Mediaset wanted it, to diversify. It only has two assets in America, Deal or No Deal and Big Brother. For us, at that price it was insane, so we walked away at an early stage.

Does the volatility in the credit markets mean that you have to look at deal making in a different way?
At the end of the day nobody knows the effect. The reality is that the people saying "yes there will be a recession" don’t know and the people saying "no there won’t be a recession" don’t know. We’re looking at opportunities, but keeping our powder dry and sitting on a pile of cash that is waiting to get invested.

So, what impact will the ‘credit crunch’ have on you?
We won’t see the debt markets go to what they were, but deals are still getting done. Expectations of return have to be different, but there are always going to be opportunities. At the moment we’re looking at three deals that we think are under the radar, including one that is for a global company with a European arm. There are still opportunities, but it’s bye-bye to the gung-ho markets we saw until last summer.

What is the Saban approach to new media?
When Rupert Murdoch paid $580 million for MySpace everyone said he had fallen on his head, but now it’s worth at least twenty times what he paid. We have been lagging in this area, we have not paid enough attention in the US or Europe and are in the process of remedying that. We’re in the process of putting a team together, but haven’t looked at anything yet. We should have, we didn’t, but we will.

You are a part-owner of Univision, what is your reading of the US Hispanic TV market?
The growth is in three areas. One, it’s a growing demographic and therefore there’s growth in ratings. Two, we’re closing that gap in the amount of money advertisers pay for 1000 eyeballs, which is still way below what’s paid for the rest of the population. We’re asking "why, why are you paying less?" The third growth area is retransmission fees. Univision never got paid for its signal. Operators have their Hispanic tier with Univision generating 80% of the ratings to that tier, but they’re not paying for it.

But, in terms of retransmission fees aren’t you asking for more for Univision than the other networks?
It’s not accurate to say that we’re asking for more. It appears that we’re asking for more, but we haven’t been in the position the mainstream networks have enjoyed. They have been launching additional nets and boosting their asset value – and we’re going in a different direction and actually asking for less than the mainstream networks have received overall.

Univision’s pipeline of programming from Televisa is now threatened. How will this situation play out and what contingency plans are in place?

Point one is we have a ten-year contract. It is our expectation that they will respect that. As new owners, we inherited a dispute between the company and Televisa. My personal relationship with Televisa is excellent – I have found that they are aggressive but not unreasonable. We are in discussions about resolving the issues. It got very personal with the previous owners. Our expectation is that these difficulties will be resolved, though there is, of course, no guarantee that they will.