French media company the TF1 Group has revealed further details of the exclusive negotiations it has been pursuing since mid-November with US programmer Discovery Communications aimed at forging a strategic alliance which would create value for both companies across their numerous complementary business activities.

The TF1 Board of Directors, meeting on December 12, gave CEO Nonce Paolini authority to continue and finalise the negotiations in three key areas:

Develop the future activities of Eurosport

A relationship between Eurosport (the only pan-European sport channel) and Discovery Communications (whose channels are available to 1.8 billion subscribers in 217 countries), would unlock synergies and complementary capabilities, particularly at the European level, in content (sports programming, entertainment, documentaries, etc.) and in development opportunities (geographical expansion, new product launches, digital roll-out, etc.).

To this end, Discovery would take a 20 per cent minority interest in the Eurosport group (Eurosport International and Eurosport France).

The acquisition of the 20 per cent interest would involve cash consideration of approximately €170 million.

Discovery also would have the possibility (via an option granted by TF1) of raising its interest to 51 per cent in two years’ time. If Discovery exercised its option, TF1 would have the ability to exercise a put option over the remaining 49 per cent, which potentially would increase Discovery’s ownership to 100 per cent.

Develop pay-TV content in France

The alliance also would aim to enhance the output of documentary, magazine and current affairs channels in order to offer French distributors a flagship range of theme channels built around the content and brand portfolios of the two groups.

Discovery would become a shareholder in the TV Breizh, Histoire, Ushuaïa TV and Stylía channels, with a 20 per cent interest in each with the ability to increase to 49 per cent in two years.

The acquisition of the 20 per cent interest would involve cash consideration of approximately €14 million.

Develop production activities in France via TF1 Production

In the production field, the proposed alliance would pave the way for the production of magazine and documentary programmes of international standing via TF1 Production.

An agreement is expected to be signed in the coming weeks, once the relevant employee representative bodies have been consulted.

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