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This story first appeared in the Oct. 31 issue of The Hollywood Reporter magazine.
Old Europe has an image problem. Its economies, in contrast to the boom territories of China and India, are seen as sluggish, its population aging and growth slim to nonexistent.
Well, forget what you’ve heard. When it comes to the global TV business, studios are looking to Europe for the next gold rush. The past year has seen a flood of billion-dollar deals as U.S. congloms snatch up European TV assets.
Discovery Communications paid $1.7 billion for Scandinavian channel group SBS Nordic and picked up sports network Eurosport International in a deal that valued Eurosport at $1.2 billion. It then teamed with John Malone‘s Liberty Global in a $930 million deal to buy U.K. production group All3Media. Separately, Discovery also acquired London-based independent producer Raw, the company behind its hit Gold Rush.
Further, AMC Networks this year completed its $1 billion acquisition of Chellomedia, a digital TV group that reaches nearly 400 million European households. Viacom carried out its biggest acquisition since its 2006 split from CBS Corp., putting up $725 million to acquire British network Channel 5, making Sumner Redstone‘s conglomerate the first U.S. company to own a British free-to-air broadcaster. Warner Bros. in June spent $273 million buying Dutch reality TV producer Eyeworks. Netflix in September carried out its biggest international expansion, launching in six new European countries. 21st Century Fox and Apollo Global Management just completed a megadeal to combine Europe’s Endemol and Shine Group with Core Media Group to form the world’s largest independent TV production company.
Dee Forbes, president of Discovery’s Western European operations, calls the region “a sleeping giant.” It’s not just that the economies are starting to bounce back after the 2008 crash: While the U.S. TV market seems sated, Europe has room to grow. European digital TV and VOD services are “years behind where the U.S. is, so there is still ample room to increase pay TV penetration rates but also to really monetize the subs that are there today,” says analyst Tony Wible. “Europe is a logical way to accelerate your overall growth and become less dependent on the U.S. ad market.”
And, notes PwC global media and entertainment analyst Marcel Fenez, Europe has an advantage over more-hyped territories like China because of its clear legal structure with comparably little regulation (France’s bureaucratic system aside). “There are organizations that have put a lot of money in [China] and failed,” says Fenez. “Time Warner and Turner had a couple of ventures that didn’t turn out well, and in China, there is this ongoing risk that there will be more regulations.”
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