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SoftBank Eyes a DreamWorks Buy – Report

Sarah Thomas
9/29/2014
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Its dreams of acquiring T-Mobile dashed, SoftBank's latest acquisition target appears to be US-based movie studio DreamWorks.

According to reports in the Wall Street Journal and Hollywood Reporter, Sprint Corp. (NYSE: S) owner SoftBank Corp. is in talks to acquire DreamWorks Animation, makers of such fantastic animated flicks as Shrek and Madagascar.

The Hollywood Reporter suggests the purchase price being discussed is $3.4 billion, while the WSJ says an investment, rather than an outright acquisition, might result from the talks.

SoftBank gave up its pursuit of T-Mobile US Inc. over the summer, but remains cash-rich and acquisition-happy -- especially now that Alibaba.com Hong Kong Ltd. , the Internet company it has a 32% stake in, recently made its IPO to the tune of billions of dollars. (See SoftBank Could Consider Euro Acquistions.)

For its part, DreamWorks, valued at around $2 billion, has been keen on expanding beyond feature films to TV, online video and consumer products, goals which SoftBank could help it achieve. The WSJ reports that it is also looking to expand into SoftBank's home continent of Asia. For SoftBank, this investment would be one of 1,300, but would help it achieve its goal of expanding into digital content.


Want to know more about operators' content strategies? Check out Light Reading's dedicated services/apps content channel.


Why this matters
For SoftBank-owned Sprint, acquiring DreamWorks is another, albeit less obvious, way to compete against the big two US carriers, AT&T Inc. (NYSE: T) and Verizon Wireless . T-Mobile would've given Sprint more spectrum and customers, but DreamWorks would give it exclusive content that the other operators can't touch. Given how difficult it has historically been for operators to work out deals with content providers, this would be an important leg up for Sprint. (See Sprint Drops Bid for T-Mobile – Reports .)

It also speaks to how important content in general, but specifically video, is becoming to all the major wireless operators. As their networks become increasingly on par, they are looking to differentiate with content and services. Verizon and AT&T are both planning LTE Multicast services, alongside uniquely mobile TV and video services. This could be a way for Sprint, which still has a long way to go on the network front, to start to differentiate on content as well. (See Sprint CEO: Price Cuts First, Best Network Next .)

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— Sarah Reedy, Senior Editor, Light Reading

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sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
10/2/2014 | 1:34:41 PM
Legendary investment
Interesting that this investment comes days after the DreamWorks rumor: http://www.lightreading.com/video/mobile-video/softbank-invests-$250m-into-legendary/d/d-id/711208 I wonder if it's instead of DreamWorks. It could certainly be in addition to as Son is betting big on digital content.
MikeP688
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MikeP688,
User Rank: Light Sabre
9/30/2014 | 3:50:49 PM
Re: Sprint's content strategy
I view Softbank's CEO as Japan's Barry Diller.    We all know what has been going on with IAC--although they have been successful, the problem is a long term strategy.    I continue to question Sprint's viability--although I am also a fan too since I use their very vibrant hotspot that I use which "Freedompop" uses     It is such potential innovations that may well be transformational for Sprint vs. wild deals which may frankly not go anywhere.
briandnewby
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briandnewby,
User Rank: Light Sabre
9/30/2014 | 3:36:32 PM
Re: Sprint's content strategy
It does bring to question what Softbank's strategy is.  I wondered what Sprint's was, but maybe the more relevant question is, "What is Softbank doing?"

It's starting to look like Softbank is just trying to acquire assets and will try to figure out how they connect on the fly.  A and B, but the deal for C fell apart?  No problem, on to D, even though C and D are in totally different industries. 

It could just be as simplistic as a smart guy who seeks undervalued assets if he can turn them around and he assumes he can do just that.  Maybe the thing Sprint and Dreamworks share is simply that they have upside.
sam masud
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sam masud,
User Rank: Light Sabre
9/30/2014 | 2:23:49 PM
Re: Sprint's content strategy
Might me a smart move, but I am with you in that the movie business is a risky venture--even if a Hollywood hotshot is behind Dreamworks Animation. One big-budget flop, and it could really hurt both the brand and bottom line, particularly since Dreamworks Animation makes less than a handful of movies a year. Then instead of Shrek there will be shrieks.
MikeP688
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MikeP688,
User Rank: Light Sabre
9/30/2014 | 2:04:41 AM
Re: Sprint's content strategy
I was also intrigued just like all my brethren here when I saw the reporting over the W-End. What is also intriguing is how Softbank itself has played such a houdini-game of sorts as it has worked to reinvent itself over the past 20 years.   There is nothing wrong with being exclusive as I see it--but the issue is "outreach".    Sprint may well be another "outlet" for distribution--which is understandable.   But that still does not answer the long-term viability of Sprint as a major Player--or for that matter, T-MObile.   You can only get so creative with giving away gear and up the data plan :-) 

 

PS--Just for laughts, I popped into Ebay..and saw this that was being bid @ $102.50..i think it will be in the 600+: 
smkinoshita
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smkinoshita,
User Rank: Light Sabre
9/30/2014 | 1:05:21 AM
Re: Sprint's content strategy
" Given how difficult it has historically been for operators to work out deals with content providers, this would be an important leg up for Sprint."

I agree, but I really hate it when content providers go exclusive.  I mean it's just entertainment but at the same time it's even more media and information control.
briandnewby
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briandnewby,
User Rank: Light Sabre
9/29/2014 | 8:28:13 PM
Re: Sprint's content strategy
I liked the strategic possibilities, but was most impressed with my own independent off-the-cuff valuation putting Dreamworks at $2 billion, and seeing that typed here.

It's an odd kind of purchase--a huge hit or bomb will taint the evaluation of the deal, and I don't know that it would be in Dreamworks' best interest to favor content only to its parent.  Still, just think of the merchandising of phones and such, let alone the content possibilities.

And, yes, I'll have to go with Shrek as well.  Maybe a Shrek phone can have sound out of both ears.
sarahthomas1011
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sarahthomas1011,
User Rank: Light Beer
9/29/2014 | 3:32:52 PM
Sprint's content strategy
This deal would be beneficial to both SoftBank and DreamWorks.  It won't help Sprint as much as T-Mobile might have, but when you combine all the content companies SoftBank is buying up -- SuperCell included --Sprint could have a pretty powerful content story. That will help it, although not until its network is up to par.

In other news, what is your favorite DreamWorks movie? I'm for Shrek, all the way.
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