In what analysts describe as a well-timed partnership in the barely tapped and growing Scandinavian commercial TV market, Capital Cities/ABC has acquired a 21% ownership interest in Luxembourg-based Scandinavian Broadcasting System S.A. for approximately $ 40 million.

Under the terms of the deal, CapCities/ABC will snap up 1.6 million SBS shares, or 16% of the outstanding shares, in addition to acquiring warrants to purchase another 500,000 shares, equal to 5% of SBS.

The deal, which is expected to close by the end of this month, will make CapCities/ABC the largest single SBS shareholder.

CapCities will pay $ 25 per share for the initial SBS shares, and is prepared to pony up $ 12.5 million for the rest. The U.S. company also has the right to buy further shares on the open market, increasing its holding up to 25% of SBS.

“This investment is another important building block in our plans to be a long-term player of consequence in the global arena,” said Daniel B. Burke, prexy and CEO of CapCities/ABC in a statement.

Entering Scandinavia in 1988 in the first wave of commercial prospectors, SBS owns and operates five commercial TV stations in the area: Satellite-to-cablersTV Norge in Norway and TV5 in Sweden and Danish terrestrials Kanal 2, Kanal Danmark and TV Fynboen. SBS also owns interests in other local TV stations.

SBS posted net revenues of $ 33 million for nine months ending Sept. 30, equaling a 56 cents loss per share; last year the company had $ 12.4 million net revenues at a $ 1.20 loss per share.

“After we went public (on Nasdaq) earlier this year, we heard from a number of global broadcasting players, and …(thought) it would make sense for us to align with CapCities/ABC,” said SBS’ American chairman/CEO Harry Evans Sloan. Sloan added that no concrete decisions have been made about how this deal immediately will affect the SBS slate, which currently is banking on American-style gameshows and longform series.

“It’s a great deal for both companies,” said media/entertainment analyst Jessica Reif from Gotham-based outfit Oppenheimer & Co., Inc. “It gives CapCities a foothold in another part of Europe and also gives SBS more visibility.”

CapCities/ABC Video Enterprises, the international arm of the media conglom, has equity stakes in three European production companies (Germany’s TeleMunchen, France’s Hamster, and Spain’s Tesauro), while ESPN, another CapCities subsidiary , has partnered with local sports channels in Europe and Japan.

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