TF1, Discovery alliance deal expected within weeks

The French media group is continuing negotiations to forge a strategic alliance with the U.S. non-fiction media giant that would drive growth of sports net Eurosport, pay TV offerings in France and documentary production.
December 13, 2012

French media group TF1 is continuing negotiations to forge a strategic alliance with U.S. company Discovery Communications, with a deal expected to be closed within weeks.

Last month, the companies revealed they had entered into exclusive negotiations for a strategic alliance to drive growth of sports network Eurosport; enhance the pay-TV offerings of both companies in France; and develop a mutually beneficial content production relationship.

According to a release from the TF1 Group, under the proposed deal, the French company would give Discovery a 20% minority stake – or $222 million -  in the Eurosport group to develop the pan-European sports channel Eurosport with the option of raising its interest to 51% in two years’ time. At that point TF1 could exercise a put option over the remaining 49% to potentially increase Discovery’s ownership to 100%.

TF1 also said a strategic alliance 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).”

The alliance would also aim to increase the output of documentary, magazine and current affairs channels to give French distributors a range of theme channels based on the content from the two parties. Discovery Communications would become a shareholder in TF1 pay TV channels TV Breizh, Histoire, Ushuaïa TV and Stylía. Its stake in each would be 20% – or $18 million – with the option to increase to 49% in two years.

In the production realm, a TF1-Discovery alliance “would pave the way for the production of magazine and documentary programs of international standing via TF1 Production,” TF1 said.

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