US media group Scripps Networks Interactive (SNI) is set to acquire UK-based cableco Virgin Media’s 50% stake in local pay-TV firm UKTV.
SNI plans to pay around £239m to purchase the common equity interest, and approximately £100m to acquire the…
US media group Scripps Networks Interactive (SNI) is set to acquire UK-based cableco Virgin Media’s 50% stake in local pay-TV firm UKTV.
SNI plans to pay around £239m to purchase the common equity interest, and approximately £100m to acquire the outstanding preferred stock and debt owed by UKTV to Virgin.
“The plan is to fund the transaction with cash on hand and short-term borrowings under an existing undrawn revolving credit facility,” said an SNI spokesman via email.
This revolver permits US$550m in aggregate borrowings and expires in June 2014, according to an SEC filing.
“At June 30, 2011, drawn amounts would bear interest at Libor plus 100 basis points and undrawn amounts bear interest at ten basis points,” states the filing.
For Virgin, the stake disposal is part of plans to further its focus on deploying a fibre network across the UK.
UBS and Goldman Sachs financially advised Virgin, which hired Fried Frank and Wiggin for legal advice.
SNI declined to reveal its financial adviser.
BBC Worldwide, the commercial arm of UK public broadcaster BBC, is the other 50% owner of UKTV.
Commenting on the acquisition, Kenneth Lowe, SNI’s chairman, president and CEO, said: “UKTV is a significant opportunity for Scripps Networks Interactive to participate in a thriving multi-channel, dual revenue stream media business in one of the world’s largest television markets. Making a solid investment in UKTV and entering into a strong partnership with BBC Worldwide reinforces our core international strategy which we believe will create significant long-term value for our shareholders.”
The acquisition is subject to regulatory approval, but the companies expect it to close before the end of the year.
Additionally, SNI and BBC Worldwide are in talks that could see the latter raise its shareholding to a maximum 60%, via a combination of cash and a package of digital rights for UKTV.
BBC Worldwide CEO John Smith said: “The new agreement we are developing will bring benefits to UKTV’s audiences in the way they can consume content and will help to sustain UKTV’s track record of growth. It will create the opportunity to drive further value from digital rights on behalf of our stakeholders, particularly our shareholder, the BBC.”
UKTV was formed in 1997, and currently attracts around 36 million viewers a month across ten lifestyle, entertainment and non-fiction channels, including Dave, GOLD and Good Food.
