Viacom Buys U.K's Channel 5 for $757M

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 quarter

Desmond, 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."

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