LONDON — The $19 billion merger of CLT/Ufa and Pearson TV, announced Friday, will create a Euro TV titan with the declared intention of launching a massive push into the U.S. programming market.
Though Pearson TV has already established a beachhead in the U.S. production and distribution business, it has until now lacked the resources, or conviction, to mount an all-out assault.
But Thomas Middelhoff, chief exec of Bertelsmann, which will own 30% of the new company, confirmed at the merger announcement that he sees the U.S. as the next big target for production and broadcasting alliances.
The merged group already dominates the European TV landscape. Deal brings together German web RTL, France’s M6 and the U.K.’s Channel 5 together with “Baywatch,” “The Price Is Right” and “Neighbours.”
CLT/Ufa is the continent’s biggest private broadcaster, with stations in Germany, France, Benelux, Poland and Hungary. Pearson TV is one of the world’s largest indie producers, with a presence in 35 countries.
German media giant Bertelsmann and Albert Frere’s Groupe Bruxelles Lambert, which currently share control of CLT/Ufa, will each own 30% of the new company. London-based Pearson will hold 22%.
The merged company, with combined sales last year of $3.6 billion, is heading for a listing on the London Stock Market as soon as the deal is completed.
CLT/Ufa chief exec Didier Bellens will be CEO of the new group. Richard Eyre, recently appointed chief exec of Pearson TV, will remain as exec director responsible for content and strategy.
Merger is the latest in a spate of Euro mega-deals, which include Telefonica’s $5.5 billion takeover of Endemol and the combination of UPC and SBS. It is unlikely to be the last.
All of these deals mark the convergence between distribution with content. A decade ago, broadcasters left the production biz to indies, but that’s now being reversed as European media players bulk up to face the challenges of digital broadcasting and the Internet.
Pearson TV has a strong existing relationship with CLT/Ufa. The companies have a production joint-venture in Germany, and each owns a third of Channel 5 in the U.K. They are also partners in Hungarian web RTL Klub.
Speaking at the merger announcement, Bellens said that the old wall between CLT/Ufa’s German and its non-German operations had disappeared overnight. But there’s a danger that adding Pearson TV to the mix may revive that problem. Yet insiders argued that, on the contrary, the strength of Pearson’s production operations across Europe would remedy CLT/Ufa’s structural faults outside Germany.
For Pearson, the merger is an elegant solution to the quandary of what to do with its TV arm. Though successful on its own terms, Pearson TV has always sat rather oddly with the rest of the rest of the British company’s core interests, spanning education and consumer publishing, business info and the Financial Times newspaper.
Pearson chief exec Marjorie Scardino denied that the deal was a subtle way for the company to exit the TV biz. On the contrary, she said this combo with a powerful broadcaster was the only way to ensure that Pearson stays in the game as the global stakes are raised.
“This deal puts Pearson TV at the heart of one of Europe’s most extensive, and most popular, broadcasting networks,” she commented.
Middelhoff said, “We are now catapulting our television business into a new dimension, enabling the new group to develop new content and genres for combined television and Internet operations.”
Under the precise structure of the deal, CLT/Ufa and Pearson TV are effectively being rolled up together into Audiofina. This holding company, publicly listed in Brussels and Luxembourg, is currently controlled by GBL, but its ownership will be restructured to accommodate Bertelsmann and Pearson as well.
Audiofina will be given a new name when it moves to the London Stock Exchange.