Advanced Television

Discovery confirms SBS Nordic deal and TF1 negotiations

December 14, 2012

Discovery Communications has confirmed a definitive agreement with ProSiebenSat.1 Group to purchase the company’s SBS Nordic operations for a total enterprise value of approximately €1.325 billion. The acquisition of SBS Nordic includes 12 television networks in Norway, Sweden, Denmark and Finland, among other assets, and further solidifies Discovery’s long-term growth in the strong Nordic TV markets. The company also confirmed progress on negotiations regarding a strategic alliance with France’s TF1.

The deal also expands Discovery’s brand portfolio by adding general entertainment, scripted and sports programming to the company’s suite of services for the first time. The transaction is subject to regulatory review and is expected to close in early 2013. Additionally, Discovery also announced that its Board of Directors has approved a $1.0 billion increase to its existing stock repurchase programme.

“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,” said David Zaslav, president and CEO of Discovery Communications. “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.”

Thomas Ebeling, CEO of ProSiebenSat.1 Media AG, said: “With Discovery Communications we have found a great new strategic owner, and a truly global media leader, for our Northern European companies. I’m very happy with this result. I would like to take this opportunity to thank all our colleagues in the North, and particularly our CEO in these territories, Henrik Ravn, for their outstanding performance in the past years. I wish them every success as part of the Discovery family.”

The company said it would further increase its focus on the German-speaking Broadcasting and Digital and Adjacent segments while accelerating its own transformation into a digital entertainment powerhouse. Ebeling said that by achieving an attractive price, it had created a great deal of added value for all shareholders. “In the future, we will focus even more strongly than before on combining our German-language TV and digital activities, since that is where our greatest potential for growth and synergies lies. We will be significantly accelerating the growth of our Digital and Adjacent segment: both organically and through attractive bolt-on acquisitions at reasonable prices. In so doing, we will focus in particular on companies that complement our portfolio and for which we can create critical mass using our Group’s media power. By expanding and reinforcing our German-speaking Broadcasting and Digital and Adjacent segments, we are making our company fit for the future,” he asserted.

“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,” said 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.”

Discovery also confirmed the next steps in its negotiations with French broadcaster TF1 aimed at forging a strategic alliance to create value in the numerous complementary activities of the two media companies, as revealed by TF1 December 13.

If successful, 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.

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.

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.

 

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