Viacom given a sporting chance

Click to follow
The Independent Online
VIACOM, hoping to cash in on the championship seasons of the two sport teams its owns, the New York Rangers and New York Knicks, is preparing an auction of the clubs and of Madison Square Garden.

Viacom, which acquired the teams and the arena as part of its purchase of Paramount Communications earlier this year, distributed financial information to potential bidders last week as the Garden began hosting ice hockey and basketball finals on alternating nights. The arena and the cable-television channel that follows the teams are profiting from sell-out games, leading some analysts to predict proceeds of as much as dollars 1bn from the sale, despite the fact they will earn only dollars 30m this year.

Viacom, which will use the money to pay its dollars 10bn takeover debt, included no asking price in the material it distributed to bidders last week, but indicated it would prefer to sell the group as a package. However, analysts say separate bidders could be attracted by the property value of the midtown Manhattan arena - perhaps dollars 500m - or by the appeal of the cable channel as a basis for a new national sports network.

The price the two teams will command is more likely to depend on their celebrity value, analysts say. Neither is likely to yield big financial returns for their new owners, but a league championship will almost certainly inflate their worth for a well-heeled individual, who might pay between dollars 100m and dollars 200m each for the teams.

Viacom had originally hoped to avoid any asset sales but lost an important source of equity last month when a parallel dollars 8bn merger with the cash-rich Blockbuster video collapsed.