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Sony Acquires AT&T Stake for Full Ownership of Game Show

Zacks Equity Research

In a concerted effort to focus more on direct-to-consumer offerings, Sony Corporation SNE recently acquired AT&T’s T minority stake in Game Show Network for about $500 million. The transaction enabled Sony to gain full ownership in the multimedia entertainment firm. The Game Show Network channel will, however, continue to be carried on the cable network of DIRECTV – a subsidiary of AT&T.

Game Show Network has created a bouquet of original and classical game shows for millions of subscribers through the U.S.-based cable network. It also offers online and mobile gaming facilities, with its cross-platform content providing game lovers the opportunity to win cash and prizes through interactive games and competitions.

Earlier Sony had a 52% ownership stake in Game Show Network, with the remainder held by AT&T. The divesture was part of the long-term strategy of AT&T to monetize assets through the sale of non-core businesses in order to reduce its debt burden that swelled due to the acquisition of Time Warner assets. The company aims to achieve a debt-to-EBITDA range of 2.5x by year-end 2019 by utilizing cash flow and proceeds from the sale of non-core assets.  

The acquisition of Game Show Network will augment Sony’s already robust catalogue of game shows and first-run series, thereby strengthening its leading position in the market. Notably, Sony is focusing to attain a leaner organizational structure to fuel its growth engine. The company announced a number of changes in its internal administration and reshuffled operating segments. Sony believes that converting its business units into distinct subsidiaries will enhance its organizational independence as each independent unit sets high targets in an effort to accomplish the company’s mid-term targets. Sony believes that these steps will allow it to generate sustainable profit, accelerate decision-making processes and reinforce business competitiveness, which augurs well for future growth.

Sony sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

AT&T has a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the industry are Gogo Inc. GOGO and Verizon Communications Inc. VZ, each carrying a Zacks Rank #2 (Buy).

Gogo delivered an average positive earnings surprise of 39.1% in the trailing four quarters, beating estimates on each occasion.

Verizon has long-term earnings growth expectation of 4.2%. It delivered an average positive earnings surprise of 2.2% in the trailing four quarters, beating estimates on each occasion.

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