Al Jazeera link to Digiturk acquisition

Reports have emerged in Turkey that a prominent Qatari businessman has agreed to pay $820 million for a 53 per cent stake in Turkish pay-TV platform Digiturk.

Nasser Al Khelaifi, the chairman and CEO of beIN Media Group, which runs beIN Sports, is understood to have acquired the stake from Turkey’s Savings Deposit Insurance Fund, a state entity that took control of the provider after its previous owner, Cukurova Holding, failed to meet its debt obligations. The pay-TV operator has been on sale since May 2013. Private equity fund Providence Equity Partners holds the remaining 47 per cent of the shares.

Digiturk has the exclusive rights to broadcast Turkey’s top football competition, the Super Lig. Any confirmed deal would extend beIN Sports’ coverage to a country where former parent firm Al Jazeera is steadily building up its presence. Turkish-language channel Al Jazeera Turk secured a digital licence in April 2013, while Al Jazeera launched a new website in the country in the first quarter of 2014.

Al Khelaifi is also the CEO of Qatar Sports Investments (QSI), the sovereign wealth fund that led the takeover of French football club Paris St Germain in 2011.

beIN Media Group was spun off from the Al Jazeera Media Network in 2013, and beIN Sports began broadcasting at the beginning of this year. It provides coverage in 24 countries in the Middle East and North Africa, as well as other countries including France, the US, Canada and Australia.

According to Constantinos Papavassilopoulos, Senior Analyst, Televison Media at IHS Technology, the acquisition of Digiturk would mark the largest all-time takeover deal in the Turkish media market.

For the Qataris, the acquisition of Digiturk serves a plethora of strategic goals, such as:

  • Expanding the global sports Media franchise that beIN Media Group controls: The beIN Sports brand of channels is present in 23 countries in the Middle East and North Africa, in North America (USA and Canada), in Europe (France), in Asia (Indonesia, Thailand, Philippines and Hong-Kong) and in Australia (after the acquisition of Setanta Sports Australia). Furthermore, taking full control of the most premium content in the Turkish TV market, the broadcasting on an exclusive basis of the local Sport Toto Football League matches up to 2017 (the largest generator of revenues in the Turkish pay TV business).

  • Fitting with Al Jazeera Media Network’s ‘Internationalisation strategy’ after the launch of dedicated channels in the US (after purchasing Current TV from former US Vice President Al Gore), in the Balkans (Al Jazeera Balkans stationed in Sarajevo), in Egypt (Al Jazeera Mubasher Misr), as well as the widely reported talks with Italy’s Mediaset this year for a possible investment in the Berlusconi-owned company.

  • Entering a lucrative market such as Turkey. Turkey is the largest TV market in South-Eastern Europe (with around 83 million people and 20 million TV households), and is viewed by Al Jazeera Turk’s officials as a strong-hold for further expansion in the near region. They defined their target audience as any geography where Turkish is spoken and that simply means a roughly estimated audience of 140million-150 million people in Europe, the Balkans, Caucasus, Central Asia and the Middle East.

  • Benefiting from the high prospects of the pay TV business and market in Turkey. According to IHS Television Media Intelligence at the end of 2014 there are around 5.8 million primary pay-TV households in the country which will rise to 7.6 million in 2020 (growth of 31 per cent). IHS expects revenue growth to be even more impressive: according to IHS Television Media Intelligence from around $1.2 billion in 2014 (from pay-TV households only, excluding hotels, bars, restaurants and the renting of equipment) to over $2 billion in 2020 (growth of 67.5 per cent).

Digiturk, as a lucrative asset, had attracted the interest of some of the largest Turkish Media and Telecoms corporations such as the Dogan Holding Group, Turk Telekom and the Dogus Media Group. Turkish Media had cited International Media companies such as News Corporation and Liberty Global as interested in acquiring the operator.

Dogan Holding Group had made the highest reported bid for the 53 per cent stake, offering $880 million in January 2014. However, IHS Television Media Intelligence believes that a possible acquisition of Digiturk by Dogan Holding Group would have been blocked by the Competition Authority of the country, with Dogan already controlling the second largest satellite pay-TV platform in Turkey (D-Smart).

According to Papavassilopoulos, the financial backing from the new Qatari owners will undoubtedly strengthen Digiturk’s dominant position in the Turkish pay-TV market. However, as the pay-TV business in the country is facing positive prospects for the near future, the other major players (D-Smart, Turksat and TTNET) are not going to sit idly by: just one week prior to the Digiturk takeover, TTNET (the IPTV offspring of Turk Telekom) announced the acquisition of Media rights for the UEFA Champions League and Europa League competitions for the period 2015-2018, a move that will certainly boost TTNET subscriber numbers.

You must be logged in to post a comment Login