Discovery Communications Inc. (DISCA:US) said it will raise its stake in Eurosport, making it more competitive against British Sky Broadcasting Group Plc (BSY) and BT Group Plc (BT/A) in bidding for TV sports rights.
“This control gives us a leg up on everyone for the platform we can provide, and now we’re competitively in the race country-by-county to look at every sports right,” Discovery Chief Executive Officer David Zaslav said in an interview yesterday. “We’re not ruling anything out.”
Discovery will increase its stake in Societe Television Francaise 1 (TFI)’s Eurosport to 51 percent from 20 percent, with a possibility to buy the rest of it should TF1 exercise a put option over the remaining 49 percent, the companies said in a joint statement yesterday. Eurosport is valued at 902 million euros ($1.2 billion), the companies said.
The purchase illustrates the value of sports broadcasting and continues Discovery’s push overseas in recent years to fuel growth through new channels and programming. The Silver Spring, Maryland-based company, which owns Animal Planet and TLC channels, bought the initial stake in Eurosport a year ago, around the same time it announced the acquisition of ProSiebenSat.1’s SBS Nordic unit, which operates stations in Norway, Denmark and Sweden.
Following a number of takeovers in past years, including buying BBC Worldwide out of its joint venture in Animal Planet in 2010, Zaslav said Discovery would invest in existing businesses and look “opportunistically for additional assets.”
Shares in Societe Television Francaise rose as much as 6.1 percent in Paris trading and were 3.2 percent higher at 14.80 euros as of 9:27 a.m. Discovery fell 0.4 percent in New York yesterday to $80.60.
“Even during economic challenges we’ve continued to grow and we expect growth will be moderate,” he said. “It’s about getting more people watching more channels and continuing to grow double digit.” The combined reach of Discovery, Eurosport and SBS will be 2.7 billion cumulative subscribers across nearly 200 networks in more than 220 countries, according to yesterday’s statement.
Eurosport, which operates in 54 countries and counts the U.K., France and Germany among its biggest markets, adds to Discovery’s pay-TV distribution and value to advertisers, Zaslav said, adding that the network is the only pan-European sports platform.
Discovery, in which cable TV billionaire John Malone controls 29 percent of voting rights, earns about half its revenue from ads, with the rest from rights fees from pay-TV operators.
New operators angling for the right to air European sports matches, such as Al Jazeera’s BeIn Sport and BT, are challenging more established broadcasters such as BSkyB and France’s Canal Plus.
Former U.K. phone monopoly BT, which owns ESPN channels in the U.K. and Ireland, in November agreed to pay $1.4 billion for Champions League and Europa League soccer rights, beating competitors including BSkyB. BT in August also unveiled new sports channels free to broadband customers. BeIn in France beat Canal Plus to most of the rights for Champions League in the last round of bidding, while France’s rugby league said it’s ending an exclusive deal with Canal Plus and auctioning the rights.
“Nobody can match the distribution that Eurosport has and its brand,” Zaslav said. “We can buy rights across all countries it operates in or we can lean in on specific countries and buy more compelling rights.”
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