LONDON (The Deal) -- Sumner Redstone's Viacom (VIA) is to branch out into free-to-air advertising-led TV in the U.K. with an agreement to acquire British broadcaster Channel 5 from Northern & Shell Media Group for 450 million POUNDS ($757 million).
The deal, announced Thursday, May 1, will deliver Northern & Shell's owner, the down-market-media mogul Richard Desmond, a return of over four times his 2010 investment in the company, which he bought from RTL Group plc for 103.5 million POUNDS.
Viacom said the price will be financed from Viacom's existing cash balances and the transaction, which is still subject to regulatory approvals, is expected to be accretive immediately after closing.
Nasdaq-listed Viacom also announced quarterly results Thursday, reporting total debt of $13.38 billion as of March 31 and $2.58 billion cash on its balance sheet. It added that it had redeemed $600 million of outstanding 4.375% senior notes due September 2014 subsequent to the end of the quarterDesmond, the publisher of the tabloids Daily Express and Daily Star and the celebrity gossip magazine OK!, has fed his TV audience on a diet of reality TV, bought-in crime dramas, including the CSI franchise and The Mentalist, and Australian soaps. His four year tenure has left the business in better shape financially. "Since Northern & Shell's acquisition of Channel 5 in 2010, the financial and operating performance of the business has been transformed with improved audiences and content offering," said Channel 5 chief operating officer Paul Dunthorne in a statement. "The combination of Channel 5 with Viacomm's global resources, technology and expertise adds further to the momentum of the business and offers numerous exiting opportunities for the channel's future." Viacom president and CEO Philippe Dauman explained that the deal would both introduce Viacom content to U.K. audiences and bring the resources to generate new content locally and available for international distribution. "The deal will dramatically increase Viacom's investment in content produced in the U.K., which has a widely admired public service broadcasting culture and a globally influential production sector," he said in the same statement. "We look forward to partnering with local producers to introduce more U.K. created content to global audiences and will continue to explore opportunities in the U.K. both in the free-to-air and pay television markets." Northern & Shell was advised by Barclays plc and Ian Rosenblatt, Chris Pulham and Jon Lovitt of the London law firm Rosenblatt Solicitors, which also advised Northern & Shell on the original acquisition.
Viacom was advised by Goldman, Sachs & Co., and the law firms Shearman & Sterling LLP, Olswang LLP and Lewis Silkin LLP.
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