NBC Uni, Sparrowhawk winging it

$350 mil pact could mean wedding bells for Bravo, Diva

NBC Universal and Sparrowhawk Holdings trumpeted their expected union this week, saying that the companies together will deliver revenue of $350 million in 2007, nearly double what NBC Universal's international channels business brought before the deal (HR 8/29).

The deal, worth a reported $350 million, will unite NBC Uni's 12 international channels, including 13th Street and Sci Fi, with the 18 pay TV channels run by Sparrowhawk, led by flagship brand the Hallmark Channel.

NBC Universal International president Pete Smith believes the combination of the companies will provide "double-digit" revenue growth in 2008. He also told reporters that the companies' channels and distribution footprints are complementary for the most part, with NBC Uni's channels skewing male and Sparrowhawk more female.

He also thinks that there could be "an early marriage" between U.S.-based Bravo and Diva, a Sparrowhawk channel soon to be launched in the U.K.

"It's important that NBC Universal grow its pay TV business now, and quickly, be-cause I see a horizon on this business of between seven to 10 years, so we need a meaningful business within two years," Smith said. "If you do look at the pay TV and ad revenue in a lot of markets like Central and Eastern Europe and in a lot of Asia markets and Latin American markets where there is an encouraging landscape out there … I didn't feel that NBC Universal had reached our full potential."

Sparrowhawk's business will be integrated under NBC Uni and led by the company's new president of global networks and digital initiatives, Roma Khanna, who will be based in London. The future of Sparrowhawk's staff of 200, half of whom are in London, remains unclear, but Sparrowhawk chairman and acting CEO David Elstein will be stepping down after a transition period. He said he will be continuing his "portfolio career" of sitting on a number of boards and looking for other opportunities.

Sparrowhawk paid $242 million for Hallmark International in April 2005, funded by Providence Equity Partners and 3i, under the chairmanship of former Five channel CEO Elstein.