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Discovery Paying $2B For Stakes In European TV Assets

Programmer Also Buying Back $1B in Stock 12/14/2012 3:44 AM Eastern
 
Discovery Communications has agreed to pay about $2 billion on television assets in Europe.
The company is purchasing the SBS Nordic operations in Norway, Sweden and Denmark from ProSiebenSat.1 Group for about $1.7 billion. It is also acquiring  20% equity stakes in TF1’s Eurosport Group and four pay-TV channels in France for $239.8 million as part of an expanded strategic alliance with TF1.
The company also said its board of directors has approved a $1 billion increase to its existing stock repurchase program.
The acquisitions put Discovery, which has focused on non-fiction programming, in the general entertainment, scripted and sports programming businesses.
“SBS Nordic has a fully distributed portfolio of dual revenue stream networks with a terrific management team that will expand Discovery’s footprint across the Nordic region, which includes some of the most well-penetrated and stable TV markets in the world,” David Zaslav, president and CEO of Discovery Communications, said in a statement. “Individually, and taken together, the acquisition of SBS Nordic, our pending strategic partnership with TF1 through the acquisition of a minority stake in Eurosport, and the increase in our share repurchase program are all complementary to our long-term growth strategy of delivering sustained operating results, creating strong organic growth through investment in content, brands and talent, and returning capital to shareholders.”
Discovery says SBS has the second largest television portfolio in Norway with four networks and a 34% share of viewership, and the No. 3 TV portfolios in Sweden and Denmark.  The acquisition includes 19 radio stations and several digital brands.
“The acquisition of SBS Nordic is a continuation of Discovery’s more than 20-year strategy of investing internationally to build the most extensive global footprint in media, which now includes 153 networks in 217 countries and territories,” noted Mark Hollinger, president and CEO of Discovery Networks International. “We look forward to adding SBS Nordic’s networks and genres to our portfolio, learning from their well-respected and experienced leadership team, and further solidifying the continued growth of our international business, which is led by our strong regional team.”
In its new deal with TF1, Discovery will help develop Eurosport, the only pay-European sports channel and develop pay-TV content in France, where it will become a shareholder in the TV Briezh, Histoire, Ushiaia TV and Stylia channels.
 
Discovery has an option to increase its interest in Eurosport to 51% in two years. If it exercises its option, TF1 could put its 49% interest to Discovery, giving Discover 100% ownership.

On a conference call with reporters, Hollinger said Eurosport, which is distributed in 59 countries and has 130 million subscribers in Europe, was attractive to Discovery because it carries regional sports like tennis, skiing, cycling and skating that have passionate fans but lower license fees.

“A few days a month this is somebody’s favorite channel. It doesn’t strive to be that big massive platform,” Zaslav said, which he sees as synergistic with Discovery’s programming model. “In general, our business is about aggregating niche audiences.”

Hollinger said the deal with TF1 does not include Eurosport’s properties being made available on Discovery’s U.S. networks, but that if through the partnership other opportunities arise for looking at their content for other regions “we will look at that.”

Discovery also has the ability to increase its stake in the TF1 channels from 20% to 49% in two years.
 
As part of the alliance, Discovery would help develop production of magazine and documentary programs through TF1 productions.
September