In December 2012, Discovery Communications entered a strategic alliance with France’s TF1 and as part of the deal, it took a 20% stake in the group’s pan-European sports platform, Eurosport. At the time, Discovery said it had the option to raise its interest to 51% in two years. Today’s announcement accelerates that move by one year with Discovery upping its stake in Eurosport to a majority interest. TF1 will now retain a put option that could require Discovery to buy the remaining 49%. The flagship Eurosport network reaches 133M homes in 54 countries and 20 languages. It focuses on regionally popular niche sports including tennis, cycling, skiing, skating, and curling. The group also includes Eurosport, Eurosport HD, Eurosport Asia-Pacific and 24-hour channel and online hub, Eurosportnews. Following are the full details of today’s deal:
Discovery CEO David Zaslav wants to quell a potentially big shareholder concern: that his pay TV networks company might become embroiled in costly bidding wars for sports rights as a result of its new investment in TF1‘s Eurosport. (That’s part of two major deals the company announced this morning.) This is Discovery’s first direct foray into the sports business. But the near-insane buying frenzies are characteristic of the U.S. market, which is “completely different,” he said in a conference call this morning. Eurosport focuses on regionally popular niche sports including tennis, cycling, skiing, skating, and curling. That’s “more manageable, much more predictable,” he says. “There isn’t one sport that they have to have….It doesn’t strive to be that big massive platform, which is consistent with what we do.” Discovery also is still feeling its way: It agreed to pay $221.6M for a 20% stake in Eurosport. It has an option to raise its holding to 51% in two years. If it does, then TF1 can require Discovery to buy the remaining 49% as well.
France’s TF1 today said its board of directors had voted to give company chief Nonce Paolini the greenlight to continue and finalize negotiations with Discovery Communications on a strategic alliance. On November 13, the companies disclosed they were in exclusive talks that could result in a significant investment by Discovery into the French media giant. Today, TF1 elaborated on the areas in which the two companies would partner and laid out some financials for the deal which is expected to close within the next few weeks.
TF1 said the two are looking to develop the future activities of Eurosport, the French conglom’s pan-European sports channel, which would see Discovery take a 20% minority interest in the Eurosport group for about $222M. Discovery would also have the option of increasing its stake to 51% after two years, at which point TF1 could exercise a put option lifting Discovery’s ownership to 100%.