Newly Sold Translation Service Sees Future in Localized Work
WALL STREET WEST
SDI Media Group Inc., a provider of translation, subtitling and dubbing services to the entertainment industry, hopes to expand its international operations after Modern Times Group of Sweden sold the company to private equity firm Warburg Pincus LLC for $60 million cash in a deal announced last week.
Both Warburg Pincus and SDI are betting that studios will seek one-stop-shops for translation services to keep their content off the black market.
Film studios used to farm out translation work to companies in specific countries through international distributors or regional offices. But the increased digitization of content has led them to limit the number of people handling it, to reduce the risk of piracy.
SDI can "localize" translate, dub and subtitle a film, TV show or videogame into more than 50 languages for simultaneous international release.
The company counts major studios like Warner Bros., Paramount, Sony and Fox as its customers, but with a new influx of capital, it is looking South, East and West for new markets.
"We have our eyes on Western Europe, Latin America and Japan," said Chief Executive Barry Perlstein.
Mark Colodny, a managing director who leads media investing at Warburg Pincus, said the insatiable worldwide demand for anything made in Hollywood made SDI an attractive buy.
"Hollywood has been a great exporter of content. SDI is in a good position to benefit from that," he said.
Jeff Marcketta, who has worked at two earlier Warburg Pincus investments, Panavision Inc. and Four Media Co., has been named president and chief operating officer.
SDI, with 105 full-time employees, will consolidate its main operations in Los Angeles, Perlstein said. The company formerly was dual-headquartered in London and L.A.
Activision Inc.'s ability to quickly scale up and over the 2 million unit mark with its "Spider-Man 2" videogame was impressive but not unexpected, analysts said.
The $49.99 game, timed to coincide with June 30 release of the "Spider-Man" sequel, was one of the most anticipated game titles of the year.
Santa Monica-based Activision last week took the unusual step of announcing the size of the first shipment of games. The company said it expects the sequel to surpass the 3 million units sold of the first "Spider-Man" game.
Activision saw the price of its stock climb to about $15 a share at the time "Spider-Man 2" was released, from around $8 a year ago. Still, while expectations for the game pumped up Activision's stock in the months leading to the release, its success hasn't propelled further gains.
"It's the old adage: Buy on the rumor sell on the news," said Michael Pachter, an analyst for the Los Angeles-based Wedbush Morgan Securities.
Activision shares closed at $14.69 on July 8.
Rising interest rates have forced Santa Monica-based Anworth Mortgage Asset Corp. to cut its quarterly dividends.
Last week, Anworth declared a quarterly dividend of 33 cents per share, down from 38 cents in the previous quarter. In a statement, the real estate investment trust's chairman and chief executive, Lloyd McAdams said: "Based on the prospects of a continued period of interest rate volatility, we remain conservative in the management of our portfolio."
Anworth borrows and invests the money in mortgage-backed securities. The interest-rate spread between its borrowings and its investments should contract as rates increase, said Advest vice president of research David Chiaverini.
"They are what's called liability sensitive, which means their liabilities, their borrowings, re-price faster than earnings assets re-price," Chiaverini said. He rates the company "neutral."
Anworth's stock was trading at $11.70 per share on July 8, down 13.4 percent since the beginning of the year.
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