* Discovery to buy ProSieben's Nordic channels for $1.7 bln
* ProSieben plans hefty dividend for controlling
shareholders KKR, Permira
* Discovery to also buy stake in France's Eurosport channel
* Deals are Discovery's first foray into fiction, sports
By Sayantani Ghosh and Harro Ten Wolde
Dec 14 Discovery Communications Inc
said it would buy 12 Nordic television channels from Germany's
ProSiebenSat.1 Media AG for about $1.7 billion to
add fiction and sports to its program offerings.
The acquisition is Discovery's largest ever and gives the
company, whose channels include Discovery Channel, TLC and
Animal Planet, a firmer foothold in Europe and sweetens the exit
for ProSieben's controlling private equity investors.
The sale of the Nordic Channels, one of ProSiebenSat's best
performing units, positions private equity investors KKR & Co
and Permira -- who together own 88 percent of
ProSieben's voting shares -- for a hefty dividend from the
German media group.
"It means the private equity owners are able to place up to
their full 53 percent stake on the market at some point," said
Goldman Sachs analyst Richard Jones.
Discovery also said on Friday it would take 20 percent
equity stakes in French television group TF1's
Eurosport Group and four pay-TV channels in France and announced
a $1 billion increase in stock buybacks.
The purchase extends Discovery into fictional programs and
sports broadcasting for the first time.
"This deal also includes our first significant foray into
scripted content and the opportunity to manage a suite of
nonfiction and fiction brands that bring different formats,
personalities and storytelling techniques to our creative
culture," Discovery CEO David Zaslav said on a conference call.
Investing in Eurosport was a cheaper option and offered more
attractive margins than a foray into the much more expensive
U.S. sports market, he said.
The Eurosport deal, worth about $221.6 million, gives
Discovery the option to raise its stake to 51 percent in two
If Discovery exercises this option, TF1 could exercise a put
option over the remaining 49 percent, potentially giving
Discovery complete ownership of Eurosport.
The $18.2 million stakes in the French pay channels give
Discovery ownership in the TV Breizh, Histoire, Ushuaia TV and
Citigroup acted as financial adviser to Discovery.
ProSieben's restructuring paves the way for a KKR and
Permira disposal after ProSieben converts its non-voting
preference shares into voting common shares to attract a broader
investor base for the Frankfurt-listed firm.
The German media group plans a dividend payment of about
5.60 euros per share after completion of the sale, which is
expected in the first quarter.
In 2012, the company paid a dividend of 1.17 euros per
preference share and 1.15 euros per common share.
ProSieben called off an attempt to sell the division last
year as offers were too low. Sources have told Reuters that
Discovery also was one of the bidders at the time.
In August this year, the German media company said it was
looking again at selling after receiving expressions of
ProSiebenSat.1 shares were up 2 percent by 1200 ET, while
the broader sector index was down 0.3 percent.
Shares in Discovery were nearly flat at $60.18 in midday
trading on the Nasdaq.