This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: IMG Worldwide Asks Who's the Vainest of Them All

Forstmann, the private equity pioneer and a longtime friend of McCormack's, acquired IMG a year after its founder's death for about $700 million. It then became a Forstmann Little & Co. portfolio company, where, with the acquisition of collegiate multimedia pioneer Host Communications in 2007, IMG assumed the three-segment configuration it's in today.

In a year-end credit ratings update, Standard & Poor's defined IMG's segments as: Sports & Entertainment, which contains talent representation, sports marketing and sponsorship sales, as well as golf, tennis, broadcasting and fashion franchises focused on event ownership and management; Media, which ranks among the world's largest independent producers and distributors of sports and entertainment programming; and College, which manages and markets rights contracts to advertisers for a large network of colleges. And, in its most recent assessment, Moody's Investors Service put IMG's revenue for the year ended on March 31, 2012, at about $1.4 billion, on which the company reportedly generated Ebitda of nearly $150 million.

Those numbers, if correct, speak to margins of 11% -- margins thin enough, a Hollywood source said, to make traditional talent agencies Creative Artists Agency LLC and William Morris Endeavor Entertainment LLC seem like cash-flow geysers. It's no idle comparison, either, in that CAA and WME are assumed to be interested in IMG. Both are already invested sports, after all, and both have private equity backing. The latter, though, raises the troublesome question of whether TPG Capital and Silver Lake want their respective portfolio companies, CAA and WME, expanding in areas even less promising than their core businesses.

The same question deserves an answer from Madison Avenue's goliaths, too. This group of designated IMG suitors features the Interpublic Group of Cos., Omnicom Group Inc. and WPP plc, all of which also have sports divisions. And while their appetite for more is well known, so is their mandate as publicly traded companies to direct M&A more toward higher-margin, digitally driven businesses.

Taking a client to Wimbledon doesn't seem so important, anymore, once Google Inc. has captured a big chunk of his ad budget. And the fact that IMG is universally acknowledged to be well run -- by Mike Dolan, a former ad man, no less, who succeeded Forstmann as chairman and CEO in late 2011 -- renders implausible the rationale of acquiring the company to implement what a source called "major operating improvements."
2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
KBH $14.92 1.90%
OXY $74.05 3.00%
ORCL $37.88 0.58%
YHOO $32.35 1.50%
AAPL $109.49 -1.20%


Chart of I:DJI
DOW 17,050.75 +138.46 0.82%
S&P 500 1,995.83 +15.91 0.80%
NASDAQ 4,810.7880 +19.6360 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs