As more and more countries lay in fiber-optic pipe, cable conglomerates have discovered an increasing sideline in international programming and distribution. Nowhere has that been true as much as it has at Discovery Communications, which today directly purchased SBS Nordic, part of Germany-based conglomerate ProSieben, for 1.33 billion euros (about $1.7 billion).
Discovery also bought a 20 percent stake in Eurosport, TF1's soccer-centric ESPN equivalent in Europe, which has "five different networks in 59 countries, with 130 million subscribers in Europe," according to Mark Hollinger, president of Discovery Networks International. Put in perspective, the U.S. has roughly 114 million household with cable television, total.
Though the first deal is for considerably more money ($239.8 million, roughly, covers the TF1 deal, which also includes a pact to create pay-TV content in France), it's the TF1 deal that will be changing the most over the next few years: Two years from when the deal closes, TF1 has the option to up Discovery's stake from 20 percent to 51 percent, giving Discovery a majority interest in Eurosport, with a further option to sell the remaining 49 percent. Presumably the next two years will include a lot of haggling over what the appropriate price should be.
Discovery's favorite child, the true-crime network Investigation Discovery, has been the topic of much admiration in the cable world for its rapid growth, and it's a brand that the parent company is pushing out internationally with a will. ID is available in 130 countries thus far, making it the fifth network (along with Discovery, Animal Planet, TLC and Science) to broadcast in more than 100 countries.
"This deal also includes our first significant foray into scripted content," Discovery CEO David Zaslav said in a conference call earlier today, where he added that Eurosport has "a much more manageable sports rights profile, as opposed to U.S. sports rights."
Discovery claimed that the deal makes it the largest distributor of cable content outside the United States, and the free cash flow is nothing to sneeze at, either, since in the same breath as the acquisitions, the conglomerate announced that it would be repurchasing another $1 billion in shares.
"These are well-run, well-positioned channels that complement our networks in healthy economies," said CFO Andy Warren.