The move, funded through Viacom's cash on hand, expands the New York company's efforts in Argentina and Latin America in general. Telefe reaches about 95% of Argentina's households, Viacom said in a statement, and produces seven of the 10 most popular local programs in the country.
"Telefe is an outstanding broadcast and production business, and this acquisition will accelerate our growth strategy in Argentina, one of the most advanced and valuable media markets in Latin America," Viacom acting CEO Bob Bakish said in the statement.
Bakish is the former head of Viacom's International Media Networks, giving him what should be a healthy insight into the company's operations outside the U.S. Viacom appointed him as acting CEO late last month, although he only formally took over the reins Tuesday.
Rumors of a potential deal for Telefe have been circulating for several weeks, with sources telling Bloomberg earlier in the month that Viacom beat out media company Time Warner (TWX) and entertainment conglomerate Cisneros Group for the network.
Wells Fargo analyst Marci Ryvicker said in an investor report on Tuesday that while the agreement itself wasn't much of a surprise, the use of cash to fund the deal rather than debt was curious.
"Recall Moody's downgraded [Viacom's] debt to Baa3 from Baa2 on [Sept. 22] on a softer operating performance and elevated leverage (gross leverage was 4.0x as of [the fourth quarter of fiscal 2016], vs. the company target of 3.0x)," Ryvicker noted.
The move to buy Telefe comes as Viacom is embroiled in talks to recombine with television broadcaster CBS (CBS) .
CBS and Viacom originally split in 2005. The companies have been considering recombining in the past months after their mutual controlling shareholder, National Amusements, sent a letter urging the companies to look into a deal. National Amusements holds a roughly 80% stake in both companies and is pushing Viacom and CBS to consider an all-stock transaction.
The companies are heeding National Amusements' request; last month, Viacom and CBS appointed special committees to consider a deal. The Wall Street Journal reported recently that CBS has hired banks Goldman Sachs and Moelis to advise the company on a potential merger, citing sources.
Although CBS CEO Leslie Moonves said in the company's third-quarter conference call earlier this month that talks are in "very early stages," Viacom shareholders said recently that a merger agreement could be reached as early as Thanksgiving, the New York Post reported.
Jefferies said in an Oct. 31 analyst note that naming Bakish as acting CEO could indicate that the CBS deal is "still on track, giving the board some flexibility while also showing a commitment to Bakish."
BMO Capital Markets on Nov. 9, meanwhile, noted that Viacom's management hasn't offered any tangible update on the CBS transaction. "We continue to believe CBS has greater leverage in any merger negotiations and remain cautious on Viacom fundamentals, especially domestic advertising," the firm said.
A deal to buy one of Argentina's most popular television networks could make the company a more attractive target for CBS. The company also recently cut its quarterly dividend to 20 cents per share from 40 cents, which has freed up cash to make deals such as the one with Telefónica.
Viacom stock was down 0.9% Tuesday afternoon to $38.50. Telefónica's American Depositary Receipts were off 3.6% to $8.61. CBS shares Tuesday were up 0.7% to $59.26.
Viacom declined additional comment on the deal. CBS declined to comment on the Viacom deal talks.