U.S.-based Viacom Inc said on Thursday it would buy British TV broadcaster Channel 5 from media baron Richard Desmond for $760 million (450 million pounds) as a keystone to develop its worldwide presence.
Viacom, which owns a stable of cable channels such as MTV, Nickelodeon, Comedy Central and movie studio Paramount Pictures, said the deal would also allow the company to tap new ideas.
Channel 5 is the free-to-air network that broadcasts popular hit shows such as reality show "Big Brother" and the crime drama CSI franchise and has more than 43 million viewers per month, according to the company.
"It was a unique opportunity," Viacom CEO Philippe Dauman said about the deal, the largest to date for Viacom since it split from broadcaster CBS in 2006.
"This gives us another significant base of programming," he said, adding Britain was a leading center of creativity for television and film.
Dauman cited Channel 5's "Milkshake!" a block of children's programming that will complement Viacom's Nickelodeon kids network.
Viacom shares fell 1.2 percent to $83.95 in afternoon trading Thursday on Nasdaq. The company also reported third-quarter results and lower-than-expected advertising revenue.
Channel 5 was launched as the UK's fifth public-service broadcaster in March 1997. It competes with ITV PLC, Britain's largest free-to-air broadcaster, the BBC and Channel 4 in the UK.
ITV's shares were up 2.19 percent at 186 pence at 1219 GMT on the London Stock Exchange on Thursday.
Desmond sold Channel 5 for more than four times what he bought it. His privately held Northern & Shell media group bought Channel 5 in 2010 for 103.5 million pounds.
Desmond, who also owns the Daily Express and Daily Star newspapers and OK! magazine in the UK, is credited with turning the channel around by cutting costs aggressively and focusing on cross-platform promotion and reality TV shows.
Viacom will finance the deal, which is subject to regulatory approvals, with existing cash, and expects the acquisition to add to earnings immediately after closing.
The media conglomerate, which is controlled by billionaire Sumner Redstone, generated about 16 percent of its 2013 revenue from Europe, noted Vijay Jayant, an analyst with ISI Media.
"This acquisition in one of the strongest markets in Europe will help diversify the company's exposure," he said.
Channel 5 had reportedly drawn interest from more than 20 potential buyers, including Discovery Communications, Scripps Networks and British Sky Broadcasting Group. (link.reuters.com/fac98v)
BSkyB provides advertising sales for Viacom's channels like MTV and Comedy Central in Britain. Dauman said Channel 5 would retain its own separate sales force.
Barclays advised Northern & Shell on the deal and Rosenblatt Solicitors acted for Channel 5 and Richard Desmond.
(Reporting by Karen Rebelo, Richa Naidu and Supantha Mukherjee; Editing by Richard Chang, Rodney Joyce, Sofina Mirza-Reid and Bernadette Baum)