Tomahawk, WI 05/02/2014 (Basicsmedia) – Communications giant, Viacom, Inc (NASDAQ:VIAB) said on Thursday it plans to acquire British TV broadcaster Channel 5 from media baron Richard Desmond for a tag of450 million pounds as a foothold to grow its worldwide presence.
Catalyzing Their International Agenda
Viacom, Inc (NASDAQ:VIAB), who possesses a cornucopia of cable channels such as the likes of Nickelodeon, MTV, Comedy Central and the movie studio, Paramount Pictures, stated that the acquisition will also allow them to generate new ideas.
Channel 5 is the free-to-air network that screens hittv shows such as the reality show, “Big Brother” and the CSI series of shows.According to the company, it has more than 43 million viewers per month.
Viacom’s CEO, Philippe Dauman, said that they intended to launch a larger number of brands internationally and that this move would accelerate their ability to do so. Dauman also said that Channel 5 will be providing Viacom with another source of programming for distribution around the world, while praising British TV for its creativity.
Following the announcement of this deal, Viacom’s shares fell by 1.6% to $83.55on Thursday morning, May 1.
A Brief Look At Channel 5
In 1997, Channel 5 had been launched as a public service broadcaster in the UK. With this deal, Desmond effectively sold the company for more than four times its original price. His privately held Northern & Shell media group had purchased Channel 5 in 2010 for 103.5 million pounds.
Desmond, who also possesses the Daily Star and Daily Express newspapers, as well as OK! magazine in the UK, is given credit for turning the channel around through aggressive cost-cutting and a focus on reality TV and cross-platform promotion.
Viacom said that it would finance the deal, subject to regulatory approvals, with its stock of cash and assumes that the acquisition would add earnings immediately after closing.
This deal could be excellent news for BSkyB, a company that provides advertising sales for Viacom, Inc (NASDAQ:VIAB) in the UK. If BSkyB were to include Channel 5’s ad sales to its portfolio, it would certainly be able to give more of a challenge to ITV and Channel 4.
The media company, presided over by Sumner Redstone, generated about 16% of its 2013 revenue from Europe.