Discovery, Liberty Global to Acquire UK Indie Producer All3Media in $930 Million Deal
UPDATED: The largest British TV producer and distributor is known for such shows as "Ramsay's Kitchen Nightmares," "Undercover Boss," "Skins" and "The White Queen."
Discovery Communications and John Malone's Liberty Global have agreed to acquire U.K. independent production and distribution giant All3Media in a deal that puts an enterprise value of about $930 million (550 million pounds) on the company.
All3Media is considered Britain's largest indie TV producer and distributor. The company's shows include Ramsay's Kitchen Nightmares, Undercover Boss, Skins, The White Queen, U.K. scripted reality hit The Only Way Is Essex and Cash Cab New York.
Private equity firm Permira has been shopping privately-held All3Media, with FremantleMedia -- owned by Bertelsmann-controlled RTL Group -- being the lead suitor until exclusive talks between the two parties recently came to an end.
All3Media was formed in 2003 by a group of former ITV executives and has acquired a portfolio of production shingles, including Company (The Village, Inspector George Gently), Objective (Peep Show), Lime Pictures (The Only Way Is Essex), Bentley (Midsomer Murders), Optomen (Kitchen Nightmares) and One Potato, Two Potato (set up by Gordon Ramsay and Optomen). International units include Germany's MME Moviement and New Zealand-based South Pacific Pictures.
All3Media first put itself on the auction block in 2011 and reportedly targeted a $1.2 billion-plus price tag. It ended the sales process when bids came in below that target, reports said at the time.
John Malone controls Liberty Global and is one of the largest shareholders of Discovery.
Discovery is believed to have focused on All3Media after recently dropping out of the bidding for British broadcaster Channel 5. CEO David Zaslav said on an earnings conference call the other day that he wouldn't talk about recent deals that have been covered in the media. But he said that Discovery's first priority in terms of investment is creating long-term value by producing content as "the expansion of the global pay-TV sector provides ample organic growth opportunities."
"We can put money back on the screen and create valuable IP," he said. Zaslav added that the company would remain "opportunistic regarding acquisitions," especially internationally, where deals would have to add must-have content or boost the firm's penetration in key growth markets. "We are very fiscally disciplined," he emphasized.
Liberty Global, meanwhile, recently sold its international channels business Chellomedia to AMC Networks for $1 billion. CEO Mike Fries has said the European cable giant was looking at possible strategic content investments -- including possible acquisitions -- with partners, as long as they provide programming that fits the company's needs and requires limited capital.
"Content production is simply one step further up the vertical integration ladder and could nicely fit into a broader portfolio of strategic content investments," he said recently. "As we look ahead [at] the broader opportunities in content, as I mentioned, production could be one of those. The opportunity to really get closer to the creation and origination of important content is something that we've talked about, other people have talked about, for a long time."
He added: "I wouldn't expect that we're going to go out and acquire a studio or things of that nature. I would say these are more tactical and incremental steps to build that four pronged content portfolio, if you will, that we know can be more strategically beneficial to the core distribution business." Any deal would have "a strong financial return, would ideally be done with a partner who understood it better, and is probably going to require relatively small amounts of capital in the context of our balance sheet because we’re not in a position to put large amounts of capital into those types of assets that are not really in our wheelhouse operationally," he concluded.