In the latest bulwark against a 21st Century Fox takeover, Time Warner may be considering an initial public offering of HBO in order to showcase the value of that division.
HBO is considered the crown jewel of the company hits like “Game of Thrones” and “Girls.” The HBO GO streaming service is also available to the pay-TV network’s subscribers.
“This doesn’t mean HBO would actually GO via an IPO, according to NY Post sources. “It means, rather, that a valuation of HBO would invite comparisons to video-streaming service Netflix, which sees itself as the new HBO and isn’t above poking fun at its more established rival.”
It turns out Netflix’s value, which includes outstanding debt, is 60.3 times the $416 million in EBITDA that the company reported for its trailing 12 months.
Slap that same multiple on HBO’s EBITDA for the most recent year — namely, $1.9 billion — and the comparable value for Time Warner’s most coveted division is pushing $115 billion, noted the story. That’s even greater than the $93 billion the market accords Time Warner in its entirety.
What’s more, because HBO owns so much of the content it broadcasts, it’s arguably worth much more than a Netflix that leases almost all of its content and only recently started amassing a video library of its own.
Small wonder, then, sources believe Time Warner will soon take its “HBO GO” case to its shareholders. Some even expect it to serve as the linchpin in Time Warner’s defense against Fox, which initially offered $80 billion for a company whose lead division is theoretically worth 44% more than Fox’s opening bid.