AMC buys Chellomedia channels in $1bn deal

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Liberty Global International (LGI) is to sell substantially all of its international content division Chellomedia to AMC Networks. The assets being sold include Chello Multicanal, Chello Central Europe, Chello Zone, Chello Latin America and the broadcast solutions unit Chello DMC. In addition, Chellomedia’s stakes in its joint ventures with CBS International, A+E Networks, Zon Optimus and certain other partners are also part of the divestment. Liberty Global will retain its Dutch premium channel business, which consists of its Film1 and Sport1 channels.

LGI expects to realise cash proceeds for the assets that are approximately equal to the agreed upon enterprise value of €750 million ($1,035 million). The consolidated assets to be divested generated approximately €350 million ($451 million) of revenue during the last twelve-months ended June 30, 2013. LGI spent $23.3 billion to buy Virgin Media earlier this year, but was unsuccessful in its attempts to buy Kabel Deutschland in Germany, losing out to Vodafone. The funds from the Chellomedia sale may help it achieve scale to compete more effectively with the telco in any future network consolidation.

Mike Fries, President and CEO of Liberty Global, described the deal as “a great transaction for all parties”, noting that Chellomedia was one of the largest international channel groups with distribution to more than 390 million households in 138 countries. “I have no doubt that the management team will continue to build tremendous value as part of AMC. For Liberty Global, this transaction is attractive from both a valuation and liquidity perspective. It also simplifies our business and allows us to focus on our core markets and more strategic programming opportunities,” he suggested.

“Chellomedia has developed a remarkable portfolio of popular channels that reach hundreds of millions around the world. As AMC Networks has expanded internationally, we have had a great desire to do something we consider fundamentally strategic, which is to take our content and put it on channels we own. This acquisition allows us to secure a large, global platform on which to distribute our increasingly successful original programming through a collection of strong, well-established and well-managed assets worldwide,” said Josh Sapan, president and CEO of AMC Networks. “Together, we can grow these assets and make them even more popular and valuable around the world.”

Chellomedia President Niall Curran said that AMC Networks were content professionals with an excellent creative and business track record. “They are highly enthusiastic about the business we have built at Chellomedia and are ambitious to develop it further, making AMC Networks a great owner and partner for Chello’s next phase of growth.”

The transaction is expected to close in the first quarter of 2014 and is subject to limited closing conditions. The transaction is not conditioned on any regulatory approvals.

The assets were put up for sale in May 2013 and it is understood that other interested bidders included Scripps Networks Interactive, Turner Broadcasting System and Discovery Communications.

AMC Networks owns the cable channels AMC, IFC, WE tv, and Sundance Channel; the art house movie theatre IFC Center in New York City, and the independent film company IFC Films.

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