Investment Banker Lisbeth Barron an Elite Influence Peddler

If there’s anyone who lives and breathes the entertainment business, it’s Lisbeth Barron, a 36-year-old financial whiz who’s among a top group of workaholic investment bankers on Wall Street devoted to making even the most impossible deals happen.

She is among a rather exclusive group of less than 20 senior bankers on Wall Street whose expertise and savvy can have great influence on significant transactions in the media business.

“She combines brains and sheer tenacity, and sometimes when the ship should sink, she’s still paddling,” says former Simon & Schuster chief Richard Snyder, noting that Barron “paddled us back to the surface” after a deal by Snyder and a group of investors to acquire Golden Books fell apart twice before finally closing last May.

Barron, a native New Yorker for whom a 90-hour workweek is not unusual, landed a job last week as a senior managing director in the media and entertainment corporate finance group at Bear, Stearns & Co.

“I told Bear Stearns, where Lis goes, I go,” says Snyder.

Sandy Climan, executive vice president and president of international business development at Universal Studios, who has worked with Barron since the start of her career, says, “Success in the entertainment industry is not solely correlated to financial engineering.”

Investment bankers “who reach beyond mere financial data to truly understand the complex nature of creating value from intellectual-property-driven businesses are few and far between,” Climan says. “They are worth their weight in gold to the companies they advise, to Wall Street and to the investment community at large.”

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Having spent eight years as a media and entertainment securities analyst, the last five at S.G. Warburg & Co., Barron made the move to the investment banker side when she joined Swiss Bank in mid-1994 to run its U.S. and Latin American media corporate finance group. (Swiss Bank later acquired Warburg.)

Her move to Bear Stearns comes at a particularly competitive time in the world of investment banking.

Over the last decade, a number of firms, such as Bear Stearns, Allen & Co., Wasserstein Perella & Co., Greenhill & Co. and Furman Selz made a big push into entertainment and have built a significant presence on Wall Street, gaining market share on some of the more established houses such as Goldman Sachs, Morgan Stanley, Merrill Lynch and First Boston.

And some big firms--including Deutsche Bank and J.P. Morgan, which backed last year’s sale of MGM--are just now entering the investment side of the business.

Barron believes that the opportunities for a relatively new player like Bear Stearns, one of Wall Street’s most profitable full-service firms, with entertainment clients that include Time Warner, Walt Disney, Viacom and Cablevision, are limitless.

“My general belief is that typically in the 1990s, there’s very little loyalty between corporations in the industry and Wall Street advisory firms,” says Barron. “That leaves the door open for someone to develop strong client relationships, if you’re fluent in many products and are with a firm that can aggressively execute whatever transactions are at hand.”

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Not unlike the old studio star system, where actors were under contract to a movie company for a number of years, Wall Street and Hollywood were historically clubby in the 1970s and ‘80s, when corporations had “house” advisors, Barron says. The business has changed from being “loyalty-driven to transaction-driven,” she explains, so that today, “there are no longer exclusive club arrangements.”

Although Wall Street securities analysts make stock recommendations and produce financial forecasts for investors, investment bankers like Barron play an advisory role to the top managements of media companies on mergers and acquisitions, joint ventures, the sale of non-core assets, private and public offerings and equity and debt underwritings.

They make as much or more money than some of the top executives in Hollywood.

Although this is a subject Barron naturally refuses to touch, financial sources say a junior banker can pull in several hundred thousand a year and a senior banker can earn millions. About 10% of an investment banker’s compensation is straight salary and 90% is discretionary based on performance.

The amount is determined not only by how much financial business that banker brings in, but on how well he or she has helped build the franchise of the firm over the course of a given year.

In her new job, Barron will be working with a group of 20 bankers in Bear Stearns’ media and entertainment group, led by Alan Mnuchin and formed about nine years ago. Her areas of focus will include transactions for film and TV programmers, cable companies, broadcasters, publishers and recorded-music entities.

“I also enjoy the strategy of trying to build vehicles [businesses] around unique managers” such as Snyder, said Barron. Last year, she represented Snyder and Warburg Pincus in a buyout of what is now Golden Books Family Entertainment and its subsequent $91-million acquisition of Loren Michael’s Broadway Video Entertainment. A third transaction involved a convertible preferred issue that raised $115 million, partially to pay for the acquisition as well as subsequent acquisitions, which she co-led with Merrill Lynch and DLJ.

Barron is currently representing former Sony Corp. of America Chairman Michael P. “Mickey” Schulhoff in building a similar base of assets, the details of which she declined to disclose.

Though Barron was not responsible for initiating any of the mega-mergers of recent years (like Disney-Capital Cities or Time Warner-Turner), as she was “more focused on smaller transactions,” she says she hopes to get involved if and when any others emerge. However, she and other Wall Street analysts don’t predict any mega-deals any time soon.

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As for what may be on the near-term horizon, Barron points to a growing crossover between cable and satellite distribution; more melding of the film and recorded-music businesses, transactions in the children’s television and publishing arenas, takeovers in the Spanish-language field, and accelerated divestitures of non-core assets by large multimedia companies such as Time Warner and Viacom.

“The investment community is moving in the direction of pushing these companies to de-leverage,” says Barron. That is one of the reasons she believes entertainment and media stocks have been lagging over the last 12 to 18 months.

Until managements of the big companies become “more proactive” in selling off nonessential assets, “stocks may continue to under-perform,” she says.

Another contributing factor to the under-performance is that filmed-entertainment assets are not commanding the same valuations they did several years ago, says Barron, referring to last year’s sale of Metro-Goldwyn-Mayer for the lower-than-expected price of $1.3 billion, and the struggle to find buyers for once-hot movie companies such as New Line Cinema and Castle Rock Entertainment.

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Born in Scarsdale, N.Y., Barron is an only child whose father was a professional golfer and mother a runway fashion model who subsequently went into the women’s retail clothing business. Her father’s death when she was 15 drove Barron to learn the intricacies of economics, because she was the one who took over the family’s finances and estate planning.

“My father was a brilliant mathematician who accelerated my whole introduction to finance and numbers,” says Barron, who spent her college freshman year at UCLA.

Barron skipped her sophomore year and entered Florida Atlantic University as a junior, graduating in 1982 at age 19 with a bachelor’s in international business and finance. With a desire to get into Harvard Business School, she decided to get hands-on management experience, moving back to L.A. to form a high-tech video company with venture capital money she had raised. Two years later, she went to Harvard, graduating with a master’s in 1986.

Her first job on Wall Street was working for securities analyst Manny Gerard, who had left his job in the office of the president at Warner Communications to form a research firm focused on building an entertainment practice.

Barron says that in her capacity as an advisor to major media companies, “you have to care tremendously for the client. . . . It’s a business where it has to be your life.”