AMC Networks has reached a definitive agreement to purchase RLJ Entertainment, Robert L. Johnson’s over-the-top video company, under which it will pay $65 million in cash for shares the cable programmer didn’t already own.
AMC had previously announced plans to acquire RLJ Entertainment in February 2018. RLJ operates two internet video subscription services: Acorn TV, which features British television and film content, and UMC (Urban Movie Channel). AMC’s agreement to acquire RLJ for $6.25 per share announced Monday is 47% a premium over its $4.25 per share offer in February.
The total enterprise deal of the value is approximately $274 million, according to the companies. Upon completion of the merger, RLJ Entertainment will become an indirect subsidiary of AMC Networks, with Johnson and his affiliates owning a 17% stake.
Josh Sapan, president and CEO of AMC Networks said in announcing the deal, “Bob Johnson is a legend for good reasons that we are the beneficiaries of. His management team is extraordinary, having successfully transitioned Acorn TV from a home video and DVD business to a leading direct-to-consumer subscription service, and growing both Acorn TV and UMC in a competitive environment, by offering excellent, sought-after content and creating strong brands.”
RLJE’s Acorn TV and UMC together had more than 800,000 paying subscribers as of June, up 45% from a year earlier. Earlier this year, Comcast launched both OTT services on Xfinity TV.
Sapan also called out RLJ Entertainment’s 64% ownership stake in Agatha Christie Ltd., the entity that manages the famous mystery writer’s intellectual property, which will give AMC Networks “with valuable IP opportunities.”
Johnson previously founded BET, which he sold to Viacom in 2001 before founding RLJ Entertainment in 2002. “I fully support AMC Networks’ acquisition of RLJ Entertainment,” he said in a statement. “I commend the special committee for negotiating the transaction for our public stockholders.”
In October 2016, AMC invested $65 million in RLJ Entertainment in the form of loans (which loans have
subsequently been increased to an aggregate of $78 million) under which AMC had the option to acquire majority control of RLJE.
The companies expect the deal to close in the fourth quarter of 2018, subject to usual closing conditions, including the approval of the merger agreement by a vote of the majority of the outstanding shares of RLJ Entertainment common stock.
Pictured above: AMC Networks’ Josh Sapan (l.), Robert L. Johnson