TalkTalk buys blinkbox and Tesco Broadband

UK quad-play operator TalkTalk has acquired the blinkbox Movies business and the Tesco broadband and fixed line voice base from UK supermarket retailer Tesco. The assets have been acquired free of debt and as a single transaction for cash.

Reports emerged in early October 2014 that Tesco was planning to sell off or shut down the loss-making operation, which has struggled to compete against services such as Amazon Prime Video, Apple, Netflix and Sky’s NOW TV OTT operation.

Tesco acquired an 80 per cent stake in blinkbox in April 2011, with the intention of using it to bolster sales of its digital entertainment offering. News of the acquisition came as Tesco issued a Trading Statement in which it set out three priorities, including protecting and strengthening the balance sheet, which entailed the disposal of Tesco Broadband and blinkbox to TalkTalk.

TalkTalk already offers its broadband subscribers a TV package via its involvement in YouView.

blinkbox is one of the leading on-demand providers of pay content in the UK and works across multiple platforms and devices – both inside and outside the home. blinkbox’s established technical expertise in multi-platform, multi-device content delivery and incremental content relationships are highly complementary to TalkTalk’s existing strategy of being the best value for money TV provider in the UK, offering customers flexible access to the widest range of free and paid for content. TalkTalk TV is already the fastest growing TV platform in the UK with over 1.2 million customers and blinkbox will help accelerate the development of its platform by delivering a number of key initiatives significantly faster, such as offering a TV app to customers for in and out of home access to paid-for content across a range of devices.

The integration of blinkbox with TalkTalk’s existing TV business is expected to begin immediately with the benefits of restructuring the combined platform and revenue synergies expected to flow from the end of calendar 2015. The blinkbox brand is likely to be dropped. Adrian Letts, blinkbox CEO and co-founder will join TalkTalk as Managing Director for TV and report to Tristia Harrison, Managing Director of TalkTalk’s consumer business.

As part of the same transaction, TalkTalk has also acquired Tesco’s broadband and voice base (c75,000 broadband and c20,000 voice households) which will enable it further to leverage the superior scale and economics of its national network. As with the recent acquisition of the Virgin Media National base, customers will be transferred across to the TalkTalk network over the coming months.

Dido Harding, Chief Executive of TalkTalk, said that since launch, TalkTalk TV had demonstrated its popularity with value-seeking customers to become the UK’s fastest growing TV service. “We are excited about the opportunity that blinkbox’s platform and technology expertise bring, and which will significantly accelerate the development of our TV platform. The purchase of Tesco’s broadband base is another example of TalkTalk leveraging its national network to grow faster. We are excited about the future of quad-play – fixed phone and broadband, TV and mobile – and this acquisition will help to further drive home our value for money advantage.”

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