By Euan Rocha
TORONTO Nov 28 Teletubbies owner DHX Media
said on Thursday it will acquire Family Channel and
three other children's channels from BCE's Bell Media
for C$170 million in cash, adding content distribution to its
The deal, cheered by analysts and investors, sent DHX shares
surging 38 percent to a lifetime-high of C$5.74 in morning
trading on the Toronto Stock Exchange.
Halifax-based DHX, which creates, produces or licenses,
children's shows such as Teletubbies, Yo GabbaGabba and Caillou,
said the deal will boost its earnings and give it a stable
stream of subscription-based revenue.
RBC Capital Markets analyst Haran Posner described the deal
as "transformational," noting that DHX is paying a very
attractive price for high quality assets.
"The acquisition strengthens DHX's core content businesses,
providing the company with a distribution channel to promote its
own family and kids brands," he said in a note to clients.
Cormark Securities analyst David McFadgen boosted his rating
on DHX to "buy" from "market perform." DHX shares were up 26
percent at C$5.27 in afternoon trading on the TSX.
DHX chief executive Michael Donovan said changes in the
media sphere were behind the deal.
"You can't be a creator and not also be a distributor any
longer, that's obvious," he said in an interview. "If you look
at the world of YouTube for example, people are constantly
creating and distributing on that platform at the same time."
DHX said Family is Canada's most watched kids channel, with
some 5.7 million subscribers. The other channels being acquired
are Disney XD, Disney Junior (English) and Disney Junior
(French). The four channels together generate over C$80 million
in revenue in annual revenue.
The deal, being financed via cash on-hand and debt, is
expected to close in 2014, following regulatory scrutiny.
Canada's Competition Bureau ordered BCE to sell these
television channels, and some others, to win approval for its
C$3 billion ($2.8 billion) takeover of Astral Media Inc.