Discovery Communications’ acquisition of a Middle Eastern cable channel devoted to food may not be the sexiest media M&A story of the year, but the deal is a prime example of the kind that the major congloms are eyeing as future profit drivers.
For many companies, there’s no hotter property these days than cable real estate in emerging territories like the Middle East, where the growth potential is as high as the skyscrapers that dot the horizon in Dubai, Abu Dhabi et al. Showbiz’s biggest players are also keen on scooping up overseas production assets to feed all of these new channels.Discovery unveiled on Tuesday the acquisition of Takhayal Entertainment, whose assets include the popular foodie network Fatafeat, which has affiliates in Dubai and Egypt.
Discovery is already one of the most successful players in international TV with 150-plus countries. Execs called the Takhayal deal “a targeted step” to extend its reach in the Middle East and North Africa, two fast-growing markets. Takhayal complements its portfolio of female-targeted lifestyle brands like TLC and Real Time.
It’s the latest in a round of deals in foreign climes for companies burned in some cases by high-profile domestic hookups and facing stagnant growth Stateside.
Simon Sutton, prexy of HBO Intl., said at a recent presentation that just about every market the division’s in is growing faster than the U.S. HBO parent Time Warner recently raised its stake in Central European Media, made a run at Dutch production powerhouse Endemol and has been eyeing assets in Turkey.
And Turner Broadcasting’s hiring of RTL’s Gerhard Zeiler, one of Europe’s top TV execs, to run its international division was a clear signal that it’s on the prowl for international expansion and acquisitions.
Moving along the dial, Scripps acquired the Travel Channel U.K. An increasingly aggressive NBCUniversal Intl. acquired a majority in Matchbox Pictures, an independent Aussie production company, and has rolled up numerous TV production entities under the NBCU Intl. TV Production banner, which boasts a marquee hit in “Downton Abbey.”
News Corp. was on the leading edge of the international TV land grab a decade ago. Its Fox Intl. Channels wing has grown to encompass more than 300 channels across Latin America, Europe, Asia the Middle East and Africa. The division is project to generate $1 billion in operating income by 2015.
Andrea Wong, who was tapped last year to head Sony’s London-based international TV production operation, is also making ripples. This past summer, Sony acquired U.K. producer Left Bank Pictures and boosted its stake in Indian TV company Multi-Screen Media.
Meanwhile, Saban Capital in partnership with Lionsgate is investing heavily in Asia through its Celestial Tiger venture.
Discovery continues to grow overseas, finding that its formulas travel well in both U.S. and local versions. Mark Hollinger, CEO of international networks, said the “acquisition of Takhayal, the premier company for cuisine and culinary programming in the Middle East, significantly strengthens our portfolio in this important region and adds content in a genre that has proven popular with our viewers around the globe.”
Five-year-old Fatafeat broadcasts to 55 million TV households in the Middle East and North Africa, and its inhouse studio contains a 700-hour library of programming. It churns out 150 to 200 hours of programming a year.
International moguls are finding themselves with deep-pocketed partners and a windfall of cash.
“We are very honored to become part of Discovery Communications,” said Takhayal CEO Youssef El-Deeb.