Sony Pictures Entertainment and AT&T Shop GSN Games Unit (EXCLUSIVE)
By Cynthia Littleton
LOS ANGELES (Variety.com) – Sony Pictures Entertainment and are awaiting the first round of bids for GSN Games, a unit of the GSN cable channel that produces social and casino games.
GSN Games was quietly put on the block a few months ago. Sony owns 58% of the company while AT&T holds the remaining 42%. Aryeh Bourkoff’s LionTree is handling the sale process for Sony and AT&T. The sale is confined to the gaming unit and does not include the GSN cabler, which is also jointly owned by Sony and AT&T.
Sources close to the situation said Sony is testing the waters to see what the market will bear for the gaming outfit headed by GSN president-CEO Mark Feldman. AT&T, on the other hand, sees GSN Games as part of its plan to sell off non-core assets in order to help pay down some of the $170 billion debt on its books following the $85.4 billion acquisition of Time Warner in June.
The partners are hoping to see bids in the $600 million-$700 million range for GSN Games, which produces a wide range of social and casino games, including “Wheel of Fortune” and “Scrabble”-branded titles.
The sale process under way could lead to Sony buying out AT&T’s stake, or it may yield new investors or partners for the unit. Prospective bidders are expected to come from the social media and gaming arena in addition to private equity players.
Reps for Sony Pictures and AT&T declined to comment.
GSN Games has its roots in WorldWinner, an online gaming company launched in Newton, Mass., in 2000. Liberty Media, which formerly owned a majority stake in GSN, acquired WorldWinner in 2007. After that acquisition the company was renamed GSN Games.
Liberty’s GSN interest went with DirecTV when Liberty spun off the satcaster into a standalone company in 2009. AT&T inherited the GSN stake through its 2015 acquisition of DirecTV.
AT&T has made it clear to investors that it is focused on paying down its mountain of debt to maintain an investment-grade credit rating. AT&T chairman-CEO Randall Stephenson told investors that the company was laser-focused on getting its leverage ratio down to 2.5 times earnings by the end of this year.
AT&T has identified its 10% stake in Hulu, which it acquired through the Time Warner acquisition, as another source of debt-reduction funds.
“Our discretionary cash flow is going to go to one place,” Stephenson told Wall Streeters at the company’s Nov. 29 investor presentation. “It’s going to be paying down debt.”
