Discovery Communications, the leading global non-fiction content company, has entered into a definitive agreement with ProSiebenSat.1 Group to purchase its SBS Nordic operations for a total enterprise value of approximately $1.7 billion.
The acquisition of SBS Nordic 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.
The transaction is expected to close in early 2013. Additionally, Discovery has also announced that its Board of Directors has approved a $1 billion increase to its existing stock repurchase program.
“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.”
SBS has the #2 television portfolio in Norway with four networks and an overall viewership share of 34%, the #3 television portfolio in Sweden with two networks and an overall viewership share of 22%, and the #3 television portfolio in Denmark with four networks and an overall viewership share of 19%. SBS Nordic’s operations also include two networks in Finland. The acquisition includes SBS Nordic’s 19 radio stations, including the #1 radio portfolio in Sweden, as well as several digital brands.
“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.”
Citigroup acted as financial advisor to Discovery Communications on this transaction. DLA Piper served as legal advisors.
Meanwhile, the company also announced next stage of negotiations for strategic partnership with TF1/Eurosport.
Discovery would take a 20% minority interest in the Eurosport group (Eurosport International and Eurosport France). The acquisition of the 20% interest would involve cash consideration of approximately $221.6 million. Discovery also would have the possibility (via an option granted by TF1) of raising its interest to 51% in two years’ time. (If Discovery exercised its 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 company believes that a relationship between Eurosport (the pan-European sports channel) and Discovery Communications, 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.).
Discovery will also 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% interest in each with the ability to increase to 49% in two years.
The acquisition of the 20% would involve cash consideration of approximately $18.2 million.
Also, it will develop production activities in France via TF1 Production. The proposed alliance would pave the way for the production of magazine and documentary programs 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, the company said.