Two of the largest international pay-television players
said last week that their programming assets would get even bigger.
United Pan-Europe Communications N.V. (UPC) said it will
pay $2.8 billion in stock and cash to buy the 80 percent of European broadcaster SBS S.A.
it doesn't already own. Discovery Networks International, meanwhile, said it would
invest $100 million to bring Discovery Health and Discovery Travel & Adventure to the
The moves are part of a wider effort by both companies to
increase their local and regional programming holdings. UPC's programming unit has
unveiled a slew of its own networks over the past six months, and last week said it will
partner with MTV Networks Europe to create Poland-specific versions of MTV and VH1. For
its part, Discovery Networks International now oversees 10 channel brands valued at $10.6
billion, according to Credit Suisse First Boston.
SBS owns 10 broadcast-TV and 17 radio stations, located
mainly in Scandinavia and Central Europe. Last week's agreement builds upon a January
deal in which SBS and UPC agreed to develop television and Internet content that can be
delivered over UPC's 6.8 million-subscriber cable network and its 133,000-subscriber
chello broadband N.V. cable-Internet platform.
It also makes UPC a powerhouse in the European media
industry beyond cable TV. The company, for example, could emerge as a stronger force in
program acquisitions, "[buying] all rights and distributing them however we see
fit," UPC Media managing director Andrew Barron said, noting broadcast, pay TV,
video-on-demand and Internet windows.
"UPC is largely a digital-services provider, and
digital services are largely about content," UPC CEO Mark Schneider said. "This
is something we needed to do." Schneider also said UPC would benefit from SBS'
existing advertising-revenue stream and local ad-sales force.
SBS chief executive officer Harry Sloan will join the UPC
UPC will pay approximately $85.14 for each SBS share, a 49
percent premium to SBS's closing price the day before the deal was announced. This
reflects the value of content companies in the wake of America Online Inc.'s
agreement to buy Time Warner Inc.
Discovery's new channels will be tailored to
local-market tastes and feature original content, Discovery Networks International
president Dawn McCall said. In July, Discovery Health, currently available in the U.S.,
will launch as a 24-hour channel in Europe and Latin America. It will bow as a programming
block on Discovery Channel in Asia and India.
Discovery Travel & Adventure, now part of the
company's European digital-channel lineup, will launch as a stand-alone network in
Latin America and as a programming block in India.
Crown Media's Hallmark Entertainment Network was also
on the programming move last week, announcing that it will create dedicated feeds for
India, Taiwan and the Philippines.