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RTL takes Five in buyout

Euro op buys out UBM share for $421 mil

LONDON — Pan-European media giant RTL has taken full control of British terrestrial web Five, buying out United Business Media’s 35.4% for £247.6 million ($421 million) in cash, roughly in line with predictions.

Deal will allow RTL, which has interests in 31 TV companies and 33 radio stations in 10 European countries, to invest in Five and get moving on a digital strategy for the private web, Blighty’s third most popular.

Wednesday’s pact values the company at $1.19 billion.

“This transaction demonstrates our commitment to our activities in the U.K. and is in line with our stated strategic objectives,” said RTL chief exec Gerhard Zeiler.

“Five is a key shareholding for us, and we look forward to continuing to work with the management team to develop the business.”

Though at loggerheads with UBM over plans to increase the channel’s program budget, RTL has nevertheless paid top dollar for U.S. fare like “Friends” spinoff “Joey.”

Deal is subject to regulatory approval from the U.K.’s Office of Communications, but it is a formality.

Five was the last of the British terrestrial giants to launch, bowing in March 1997 with a lineup dedicated to what its first program topper, Dawn Airey, subsequently described as “football, films and fucking.”

The web has since moved upscale, introducing arts documentaries and cutting back on films in primetime. Its most popular shows are U.S. skeins “CSI” and “Law & Order.”

Despite reaching only around 85% of British homes, Five went into profit in 2003 and last year made an operating profit of $32.3 million on earnings of $493 million.

The pending switch to digital will extend Five’s coverage — but is likely to hit audience share, which it needs to protect by launching spinoff services. One possibility is a preschool channel based on its successful kids fare.

RTL’s businesses include French TV stations M6 and RTL9, German stations RTL and Vox, Belgian network RTL TVI, and Dutch stations RTL4 and RTL5.

In the U.K., RTL owns content house FremantleMedia, whose assets include Talkback Thames, the company behind “Pop Idol.”

Meanwhile, German media giant Bertelsmann upped its stake in RTL to 90.4% on Wednesday after buying 7.5% from newspaper publishing group WAZ.

The companies declined to give a price for the deal, but local reports put it at $663 million.

Purchase strengthens Bertelsmann’s TV business: RTL is the conglom’s biggest revenue- and profit-generating division.

RTL’s remaining 9.6% of shares are owned by free shareholders.

(Ed Meza in Berlin contributed to this report.)

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