DHX buys Disney, Family Channel from Bell in Canada

Michelle Clancy | 03-12-2013

DHX Media Ltd has entered into a definitive agreement to acquire a passel of kids' networks in Canada from Bell Media for approximately $170 million in cash.

The acquisition includes the plum Family Channel, the most-viewed children's channel in Canada, as well as Disney XD and Disney Junior's English- and French-language channels. The transaction is expected to close in 2014 pending approval by the Competition Bureau and the Canadian Radio-television and Telecommunications Commission.

"The acquisition of these high quality Canadian channels represents an exciting new addition to DHX, one that complements and enhances all areas of our business and positions us for our next stage of growth," said Michael Donovan, CEO of DHX Media.

Family, the No 1 channel across all children's audiences in Canada, was launched in 1988 and has approximately 5.7 million subscribers. It has an English market share of 29.6% for viewers two to 17 (based on Broadcast Bureau of Measurement data for broadcast year 2011/2012). Over the trailing 12 months ended August 2013, these channels generated revenue of approximately $81 million and direct EBITDA (before corporate allocations) of approximately $27 million (unaudited). Over the past three years, revenue has increased at a compounded rate of approximately 7%, the companies said.

"The acquisition of these well positioned properties is expected to be materially accretive," said Dana Landry, CFO of DHX Media. "It will greatly expand the scale of our business, with revenue increasing by more than 70% and EBITDA by more than 90% for the last 12 months on a pro-forma basis."

DHX has also entered into a commitment agreement with RBC Capital Markets to provide a fully underwritten senior debt financing. The enlarged financing package will consist of a $210 million five-year term loan facility to refinance existing debt and pay a portion of the cash consideration of the transaction and a $30 million revolving credit facility for working capital and general corporate purposes.