For Broadcast May 21, 2008

If any TV company understands the power of Big Brother, it's Endemol. The biggest indie in Europe has been having money troubles lately, so what did the owners do? Install a financial "Big Brother" to sort out the mess.

Ynon Kreitz, one-time CEO of Fox Kids Europe, was named boss of Endemol on Monday. He was most recently a partner at Balderton Capital, which owns stakes in games company Codemasters and sport broadcaster Setanta. The timing of naming Kreitz is no mere coincidence - Endemol has just kicked off a roadshow meant to syndicate the highly leveraged debt taken on when Endemol was sold a year ago.

The three-way consortium that bought Endemol - John de Mol's Cyrte, Mediaset and Goldman Sachs - is trying to give confidence to current and potential lenders at a time when the media market is looking downtrodden.

In the past year media stocks have fallen 40%, so Kreitz has a lot to make up before he can begin delivering shareholder value. The rub is that the only way he can do that is by growing the business - and that takes capital. Hence the debt syndication exercise.

The problem is not Endemol's operating business. The problem is that the sale of Endemol in May 2007 was a very high-profile auction in a buoyant market awash with cheap and plentiful debt. At the time, banks were offering huge multiples to win the business and associated fees.

The winning bid included debt worth 8.5x earnings before interest, tax, depreciation and amortisation (Ebitda) and a deal multiple for the whole business of some 14x Ebitda. Kreitz is a savvy operator - but he has his work cut out.