Discovery Communications Starts Early Eurosport Takeover Talks

Tour de France 2013 - H 2013
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Tour de France 2013 - H 2013

Discovery, which paid French broadcaster TF1 $222 million for a stake in the pan-European sports network, currently has an option to take majority control in late 2014.

Discovery Communications is fast-tracking talks about a possible acquisition of a majority stake in pan-European sportscaster Eurosport, possibly taking control of the group, currently controlled by France’s TF1, earlier than observers had expected.

Discovery agreed in December to pay TF1 $222 million for a 20 percent stake in Eurosport, which airs coverage of such events as the soccer World Cup and cycling’s Tour de France in 20 different languages in some 54 countries worldwide. That deal included a call option allowing Discovery to take a 51 percent stake in Eurosport on or after Dec. 21, 2014.

But TF1 said in a statement on Thursday that the partners have begun negotiations to “evaluate whether Discovery will exercise its call option prior to the agreed upon date.” It added though: "The TF1 Group wishes to indicate that it will retain its 80 percent interest in Eurosport France until at least Dec. 31, 2014."

The addition of Eurosport to Discovery’s stable would further strengthen Discovery’s already strong position in Europe. The Discovery Channel is the continent’s most widely distributed network, with 270 international channels across 212 major operators in 43 territories.

That compares to 169 operators carrying Fox’s National Geographic Channel and 164 operators for Eurosport, the number three pan-national network. Viacom's MTV (160 operators) and Turner's CNN (157) round out the top five channels by carriage.

Discovery has invested heavily in its European expansion, this year paying $1.7 billion to buy Scandinavian broadcast group SBS Discovery Media from ProSiebenSat.1 and inking deals for TV rights to major European soccer and rugby tournaments – rights that would fit nicely with a Eurosport takeover. 

While TF1 appears open to selling off Eurosport, it has said that it wants to keep its 80 percent stake in Eurosport's French branch until at least the end of next year.

Discovery CEO David Zaslav has said the Eurosport deal has so far turned out better than expected, and the firm has described European advertising momentum as showing early signs of improvement.

"Things are going very well with Eurosport and with TF1 Group," Zaslav said on a recent earnings conference call. "We like the business a lot. We've been learning about the business. It's unusual. It's in 59 countries with between one and four channels, so it's a true pan-European sports vehicle. I would say we think it – looking at it now from the inside – has more potential really because of the unique nature of it."

He added: "Eurosport, like Discovery when I got here eight years ago, has a fantastic platform portfolio. Nobody comes close. There's no one that can tie even half of those countries together with even one channel, let alone 1-4. And so our challenge, us and TF1 together, is how do we take something that's doing well and has a unique platform and make it even stronger. And so we're going to attack it the same way we attacked Discovery, more local, looking at content in each country, looking at partnerships in each country."

Discovery recently also unveiled plans to air Eurosport content during a new programming block on its Velocity channel, which targets male audiences.

Georg Szalai in London contributed to this report.