Discovery set to take 20% stake in Eurosport and TF1 theme channels

Editor | 13-12-2012

The board of directors of French pay-TV group TF1 have empowered CEO Nonce Paolini with the authority to continue and finalise strategic alliance negotiations with Discovery Communications.
If negotiations are successful, Discovery would take a 20% minority interest in the Eurosport group, and such an acquisition would involve a cash consideration of approximately €170 million ($221.6 million).

Discovery would become a shareholder in the TV Breizh, Histoire, Ushuaïa TV and Stylía channels, with a 20% interest in each, and with the ability to increase to 49% in two years. The acquisition of the interest in these businesses would involve a cash consideration of approximately €14 million ($18.2 million).
Discovery would also have the possibility (via an option granted by TF1) of raising its interest to 51% in two years’ time. Furthermore, if Discovery did exercise its option, TF1 would have the ability to exercise a put option over the remaining 49%, which potentially could give Discovery full ownership.
TF1 says that a relationship between its Eurosport division and Discovery would “unlock synergies and complementary capabilities”, particularly at the European level in both content and in development opportunities, geographical expansion, new product launches and digital roll-out. It added that the alliance also aims to enhance the output of documentary, magazine and current affairs channels in order to offer French distributors a flagship range of theme channels built around the content and brand portfolios of the two groups. In the production field, the proposed alliance would pave the way for the production of magazine and documentary programmes via TF1 Production.
First revealed in November 2012, Discovery and TF1 said they would seek ways in which they can create value for both companies across their numerous complementary business activities. The move is intended to boost activities in three areas, namely: driving the growth of Eurosport; enhancing both companies’ pay-TV offerings; and developing a mutually beneficial content production relationship.