Discovery to Take Control of Eurosport International
UPDATED: The cable channel powerhouse boosts its ownership in a deal with France's TF1 that values the pan-European sports networks business at $1.2 billion.
LONDON – Discovery Communications has agreed with France's TF1 Group to raise its stake in pan-European sports network Eurosport International from 20 percent to 51 percent, further bolstering the group's European business.
The deal for the controlling stake values international sports networks business Eurosport Group at about $1.2 billion (902 million euros) after deducting $115 million (85 million euros) for Eurosport France, slightly higher than the valuation used in the Dec. 2012 deal that gave Discovery its initial stake for $222 million.
Back then, Discovery got an option to take a controlling stake in Eurosport in late 2014, but the companies ended up accelerating that schedule. The new deal to raise its stake costs Discovery around $345 million.
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Under the terms of the new agreement, TF1 will retain its 80 percent stake in Eurosport France until at least Jan. 1, 2015.
The deal is expected to close in the coming months. TF1 will retain a put option to sell the remaining 49 percent in Eurosport International to Discovery.
The addition of the Eurosport relationship to Discovery’s stable has further strengthened Discovery’s already strong position in Europe. The Discovery Channel is the continent’s most widely distributed network.
Around the same time of the original Eurosport deal, Discovery also spent $1.7 billion on the takeover of SBS Nordic in Scandinavia from Germany's ProSiebenSat.1.
The flagship Eurosport network reaches 133 million homes across 54 countries in 20 languages. Eurosport airs coverage of such events as the soccer World Cup, tennis and cycling’s Tour de France.
"Eurosport is one of the strongest, most dynamic sports platforms in the world," said Discovery Communications CEO David Zaslav. "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."
He added: "Today's announcement underscores Discovery's strategy to support already strong organic growth with targeted acquisitions and partnerships. This deal will enable our industry-leading international team and its new leader, JB Perrette, to create new value for our business partners by developing and sharing programming across channel brands and building a stronger and more diversified network portfolio."
Said TF1 chairman and CEO Nonce Paolini: "With its successful track record of investing in quality content and building global brands, Discovery Communications is perfectly positioned to further expand and increase the value of Eurosport."
"Eurosport is a big opportunity and lines up really well with our other businesses," Zaslav told THR. While Eurosport has traditionally handled distribution and advertising sales out of France, Discovery sees further upside from using local teams. "Going local is a great opportunity for Eurosport in many of its 54 markets."
He said the new Eurosport deal would allow Discovery's international business to grow even faster. If the economy in Europe stays unchanged, Discovery "will do very well," and if trends improve, "we'll be very well positioned," Zaslav said.
He also said that Discovery could decide to put more resources into sports rights, both pan-European or local rights, to enhance the Eurosport business further. But he also emphasized that Eurosport has been "very effective" at being "really disciplined" about buying sports rights.
Zaslav reiterated that Discovery could use some of its sports rights in the U.S., such as on male-centric network Velocity. But he also said the company isn't planning to go head-to-head with the established big U.S. sports networks.