Acquisition doubles international business
NBC Universal has agreed to buy Sparrowhawk Holdings for $350 million in a deal to make the company more international and less reliant on mature businesses like network TV.
The acquisition, announced Tuesday, includes the international Hallmark Channels, which have no connection to the U.S. network of the same name, and effectively doubles the size of NBC Universal’s international channels business.
It’s the first major acquisition under prexy-CEO Jeff Zucker, who told Daily Variety that the company would look to pick up other media properties in higher growth areas while selling businesses with less potential for growth.
“We’re in the process of transforming our portfolio,” Zucker said. “We are looking for high-growth areas to invest in; at the same time, we’re looking to get out of businesses with slower growth.”
Deal brings NBC U’s international cable channels to 30, a number Zucker hopes to expand to 50 within two to three years. Zucker told analysts earlier this year he expects to increase revenue derived from international sources from $3 billion in 2007 to $5 billion in 2010.
Terms of the sale were not disclosed, but the deal ends weeks of speculation that Sparrowhawk, a private equity combo backed by Providence Equity Partners and 3I, was about to sell to NBC U. When Sparrowhawk purchased the international arm of Hallmark Channel in 2005, it is estimated to have paid in the region of $242 million.
For their coin, NBC Universal will take over the international versions of the Hallmark Channel, broadcast in 152 territories in Europe, the Middle East, Africa, Latin America and Asia; plus new offerings Movies 24, Diva TV and Sparrowhawk’s stake in KidsCo.
NBC U’s existing international cable brands, CNBC, Sci Fi, crime channel 13th Street, and the action-oriented Universal, are geared predominantly toward male viewers, while Hallmark’s international channels skew female, and many already air a great deal of NBC U content, including “Law & Order,” “Monk” and “House.”
“It’s a complementary fit with what we have,” said NBC U international topper Peter Smith. “The geographical footprint is very different from ours.”
Deal also gives NBC Universal ownership of Hallmark’s broadcast facility in Denver, Colo., and international distribution rights to more than 580 library titles.
With regard to the long-term future Smith said: “I see a horizon of seven to 10 years for this business. … There’s a terrifically encouraging market out there, which hasn’t reached its full potential.”