Discovery, Hemisphere Strike International Deals

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Discovery Communications beefed up its international presence last week, upping its stake in European sports network Eurosport to 51% from about 20%, underscoring its strategy to increase its sports holdings overseas.

The deal is an extension of an earlier deal Discovery reached nearly a year ago with Eurosport parent TF1. Eurosport is vying to become the European version of U.S. sports programming juggernaut ESPN and operates about four channels in 54 countries. Its flagship channel, also called Eurosport, is available in about 133 million homes and has been snapping up rights to soccer, cricket and motorsports events.

“Eurosport is one of the strongest, most dynamic sports platforms in the world,” Discovery Communications CEO David Zaslav said in a statement. “Over the past year, as we have been working directly with our partners from TF1, it became clear that combining the power of Eurosport’s brands and audience reach with Discovery’s network portfolio, boots on the ground and country-specific expertise creates an unrivaled and powerful offering for viewers, advertisers and affiliates.”

The deal values Eurosport at about $1.2 billion. TF1 retains the ability to exercise a put option over the remaining 49%, which would potentially increase Discovery’s ownership to 100%.

Discovery already has a significant European presence — it began launching channels across the pond in 1989 — and the combined reach with Eurosport and its 2013 acquisition of SBS Nordics will make its channels available to 2.7 billion cumulative subscribers across nearly 200 networks in more than 220 countries and territories worldwide.

While Discovery added to its already substantial international assets, tiny Hemisphere Media Group made its first acquisition in the U.S. Spanish-language television market, acquiring three channels from Miami-based Media World for $102.2 million.

Hemisphere picked up telenovela and series network Pasiones, which has about 3.8 million subscribers in the U.S. and 7.2 million subscribers in Latin America; Centroamerica TV, which features news, entertainment and soccer programming from Central America and has more than 3.3 million subscribers in the U.S.; and TV Dominicana, featuring news, entertainment and baseball programming from the Dominican Republic, with more than 2.2 million U.S. subscribers.

“We felt all these networks target audiences that are underserved by existing programming service options,” said Hemisphere CEO Alan Sokol in an interview.

For example, Sokol said, the population of Central Americans in the U.S. increased by 175% between 2000 and 2012, while the Dominican population rose by 105% in the same time frame.

Hemisphere plans to add to the programming offerings at the networks, invest more in existing shows, and beef up marketing and sales efforts. Hemisphere Media was formed last year by InterMedia Partners to acquire underperforming programming assets. The deal is expected to strengthen its existing content portfolio of cable networks WAPA America and Cinelatino, as well as Puerto Rico broadcaster WAPA-TV.

Paul, Weiss, Rifkind, Wharton & Garrison LLP served as legal counsel to Hemisphere. Rothschild served as financial adviser and Kirkland & Ellis LLP served as legal counsel to Media World.

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