Malone-held Ascent Media sells unit for $113 mln

Fri Dec 3, 2010 7:44am EST

* Deal expected to close in first quarter 2011

* Regulatory filings needed in US and Singapore

* Encompass will gain presence in Asia and Europe

By Nadia Damouni

NEW YORK, Dec 3 (Reuters) - Ascent Media Corp (ASCMA.O), partly owned by billionaire media mogul John Malone, has sold its content distribution business for $113 million to privately owned media service provider Encompass Digital Media.

The deal announcement comes just over a week after Ascent said it was selling its creative services and media services businesses to Deluxe Entertainment Services Group for $68 million, including the assumption of cash and debt.

Ascent said at the time that it was pursuing strategic alternatives for both its content distribution and systems integration businesses, and that it would pursue investments or acquisitions, without disclosing specific details.

The deal will move Encompass, formerly named Broadcast Facilities, into the European and Asian markets. "The primary attraction is it is an extremely complementary transaction," Simon Bax, CEO and founder of Encompass, told Reuters.

In addition, it will provide Encompass -- founded by Bax, company president Bill Tillson and private equity firm Wasserstein & Co.-- with major facilities in the NY metropolitan area and between Los Angeles and Atlanta.

The acquisition will require regulatory approvals under Hart-Scott Rodino in the US, and the IDA in Singapore, the transfer of certain FCC licenses and Ascent shareholder approval, said Bax. The deal is expected to close in the first quarter of 2011, he said.

The combined company will possess a client base consisting of major media companies, cable and sports networks as well as government entities. These include A&E Networks/Lifetime, Sony, CBS, Disney/ABC, and the U.S. Department of Defense.

Ascent's video switch business will also allow Encompass to expand its network with key customers such as CNN, CNBC, Bloomberg, Thomson Reuters and the United Nations.

In 2008, former parent Discovery Holding Co [DISCV.UL], controlled by Liberty Media Corp (LINTA.O) chairman Malone, spun off Ascent Media as a publicly traded company. Malone still holds a minority stake in Ascent while also serving as a board member.

Ascent was at $30.99 per share at the close on Thursday. The company has a current market capitalization of $443 million. As for other acquisition opportunities, Bax said Encompass will be focused on integrating Ascent's global content distribution as its primary responsibility.

Macquarie Capital advised Encompass on the transaction, and is also providing financing with lender and shareholder Tennenbaum Capital. Moelis & Co acted as financial adviser to Ascent. (Editing by Muralikumar Anantharaman)

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