Discovery to buy SBS Nordic in $1.7bn deal
Discovery Communications has reached an agreement with ProSiebenSat.1 Group to buy the company’s SBS Nordic operations, in a deal that radically shakes up the European channel ownership landscape.
The total enterprise value of the deal is approximately US$1.7 billion (€1.32 billion), and includes 12 television networks in Norway, Sweden, Denmark and Finland, among other assets.
The deal expands Discovery’s brand portfolio by adding general entertainment, scripted and sports programming to the company’s suite of services for the first time. It is subject to regulatory review and is expected to close in early 2013.
“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, in a statement.
“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.”
In addition, Discovery announced today it had reached the “next stage” of its exclusive negotiations for a strategic partnership with France’s TF1; and also announced that its board of directors had approved a $1 billion increase to the firm’s existing stock repurchase program.
With the TF1 negotiations, the American company is proposing taking a 20% minority interest in the Eurosport group (Eurosport International and Eurosport France), which would involve cash consideration of approximately €170 million ($221.6 million).
Under the proposal, announced yesterday in a release from TF1, Discovery would have the possibility (via an option granted by TF1) of raising its interest to 51% in two years’ time. If Discovery exercised this option, TF1 would have the ability to exercise a put option over the remaining 49%, which potentially would increase Discovery’s ownership to 100%.
The U.S. firm added that a relationship with Eurosport – the predominant pan-European sports channel – 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 rollout, etc).”
For its US$1.7 billion, Discovery secures an SBS portfolio that consists of four networks in Norway with an overall viewership share of 34%, two networks in Sweden with an overall viewership share of 22%, four networks in Denmark with an overall viewership share of 19%; and two networks in Finland. The acquisition also includes SBS Nordic’s 19 radio stations, as well as several digital brands.
ProSiebenSat.1 Media CEO Thomas Ebeling 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.”
Discovery Networks International president and CEO Mark Hollinger added: “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.”