Hedge funds launch attack on Endemol

Steve Dinneen
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BIG Brother producer Endemol is involved in a fracas with a powerful group of hedge fund owners.

The hedge funds, which own Endemol’s £1.9bn debt, have accused the television giant of financial engineering to avoid breaching its loan agreement.

The spat broke out over a complex scheme in which Endemol was buying back its own debt at a discount from the original price and booking a profit on the purchases, thereby inflating its bottom

The hedge fund owners, including Goldentree Asset Management, Centrebridge Partners and Stanley Advisors, say the scheme has artificially inflated Endemol’s earnings by as much as €81m (£70m) – a third of its profits. They have even threatened to take the firm to the High Court over the matter. In doing so the hedge funds, which own around 20 per cent of the company, have squared up to some of the most powerful players in the industry, including Goldman Sachs, John de Mol and Italian Prime Minister Silvio Berlusconi.

Endemol declined to comment but a source close to the company said the two sides were in talks and they hope to resolve the situation without court proceedings.

He told City A.M.: “Endemol believes its accounting treatment is well within accepted standards.
There is no way it is in breach of its loan agreement. This is an accounting technicality, not a massive bust-up.”

Endemol, which also owns Deal Or No Deal, has been hit hard by Channel 4’s decision not to continue Celebrity Big Brother next year.

FAST FACTS | Endemol
Endemol has 80 companies in 26 countries
It produces more than 40,000 hours of television a year for over 400 networks
It employs 6,500 people, of whom nearly 80 per cent are involved in content creation.