Sony Gains Control of GSN Even With Minority Stake

Must be nice to be a minority owner, but still call the shots.


With just a 40% stake, Sony Pictures Entertainment (SPE) has gained control of the day-to-day operations of the Game Show Network (GSN), which is in an estimated 75-million homes.

DirecTV, which has the remaining 60% majority, has taken a backseat.

Yet, that's a sure concession to give SPE a tailwind as it is expected to become the principal owner of the network by 2014, perhaps as early as 2012.

In March, SPE paid $60 million to DirecTV for an additional 5% in GSN, increasing its position to 40%. With that, DirecTV also gained the right to force SPE to become the new majority owner. SPE would have to up its stake to 58% for between $234 million to $288 million, according to a Sony SEC filing.



Using those amounts, depending on earnings, that would give GSN an estimated value of between $1.3 billion and $1.6 billion, over the period of 2012 to 2014. Based on the March deal, the current value of GSN would be $1.2 billion.

On why it has turned over control to SPE, DirecTV would only say it was "a business decision." However, it surely has some protections preventing machinations such as CEO David Goldhill from lining his office with Picassos.

GSN has tried to make its programming appeal to a younger audience, but it would surely benefit from advertisers embracing suggestions that older viewers are gaining in value. In the adult 18-to-49 demo, by one measure, GSN's viewership is down by 11% in prime time this season. But among adults 50-plus, it is up by 5%.

SPE would not comment on why it sought control of GSN, though it produces "Jeopardy" and "Wheel of Fortune," where library content is part of the network's programming stable. GSN has been aggressive at trying to build a robust offering of casual and social interactive games on its Web site, where one game is "Wheel of Fortune." A rise in mobile game-playing should help.

GSN original programming includes the new sketch comedy show "Improv-a-ganza" with host Drew Carey, and dating show "Baggage" hosted by Jerry Springer.

GSN also has the original "Family Feud" five days a week at 9 a.m. Not sure what that means about future growth valuations and such, but any network that offers Richard Dawson in the morning has plenty of value.


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