Discovery buys Nordic channels, ProSieben owners near exit
By Sayantani Ghosh and Harro Ten Wolde
(Reuters) - Discovery Communications Inc said it would buy 12 Nordic television channels from Germany's ProSiebenSat.1 Media AG for about $1.7 billion to add fiction and sports to its program offerings.
The acquisition is Discovery's largest ever and gives the company, whose channels include Discovery Channel, TLC and Animal Planet, a firmer foothold in Europe and sweetens the exit for ProSieben's controlling private equity investors.
The sale of the Nordic Channels, one of ProSiebenSat's best performing units, positions private equity investors KKR & Co and Permira -- who together own 88 percent of ProSieben's voting shares -- for a hefty dividend from the German media group.
"It means the private equity owners are able to place up to their full 53 percent stake on the market at some point," said Goldman Sachs analyst Richard Jones.
Discovery also said on Friday it would take 20 percent equity stakes in French television group TF1's Eurosport Group and four pay-TV channels in France and announced a $1 billion increase in stock buybacks.
The purchase extends Discovery into fictional programs and sports broadcasting for the first time.
"This deal also includes our first significant foray into scripted content and the opportunity to manage a suite of nonfiction and fiction brands that bring different formats, personalities and storytelling techniques to our creative culture," Discovery CEO David Zaslav said on a conference call.
Investing in Eurosport was a cheaper option and offered more attractive margins than a foray into the much more expensive U.S. sports market, he said. Continued...