View from City Road: Sony studios may be Diller's salvation

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The Independent Online
It seems that Barry Diller, the loser in the titanic struggle over Paramount Communications last week, was sanguine about his defeat for good reason: an equally valuable source of entertainment software may be coming on to the market and on much less risky terms.

Sony, it appears, is finally acknowledging that it needs a partner to run Columbia Pictures and TriStar Entertainment, the two Hollywood studios it acquired from Coca-Cola back in 1989. Suggestions are that it has hired Furman Selz, a Wall Street investment bank, to find a buyer for 25 per cent of its operation at a price of about dollars 3bn.

That figure - based on asset values realised at Paramount - would value the studios at more than twice the sum Sony paid for them, despite the fact the stake would not represent a controlling interest, and despite the fact the studios continue to lose money after interest and depreciation costs.

But in the heat of the multimedia revolution, in which programming has been identified as the scarcest resource, Sony just may get its price.

Mr Diller and John Malone of Tele-Communication, who is also talking with rival Matsushita about its MCA studio, are only the most obvious bidders. Dozens of other cable TV entrepreneurs, backed by the most plentiful of resources, the cash of America's telephone utilities, clearly believe they can extract synergies where those behind the last round of media mergers - between American entertainment software and Japanese entertainment hardware - have so clearly failed.

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