AMC Networks has acquired Liberty Media’s Chellomedia, which operates channels distributed to some 390 million households in 138 countries, for $1.04 billion.
In a statement released Monday, AMC Nets said the Chellomedia properties “span a range of genres” and ultimately offer “significant long-range opportunities” for the programmer to distribute its original series outside the U.S.
The transfer in ownership creates some interesting business relationships: for one thing, among the channels distributed by Chellomedia are networks owned by A+E Networks, notably History, Bio and the Spanish cable net Crimen e Investigación.
CBS also owns multiple networks distributed by Chellomedia, and several versions of popular French pay-cabler Canal Plus are also on the service. The smart money would seem to be on Chellomedia dropping smaller and less popular networks—not all the companies in the portfolio have material from large entertainment conglomerates attached to them—in favor of AMC’s home-grown content. This would enable AMCN to grow outward into the international market, which would offset the calcification of the domestic cable market.
The primary markets for Chellomedia are Western Europe (68 percent of the company’s revenues are generated in Poland, the Netherlands, Spain and Hungary) and South America.
Interestingly, stocks didn’t just drop on the news that AMC had made the purchase, they were downgraded: Rich Greenfield of BTIG Research dinged AMC Networks down to a Neutral from a Buy, saying that while he could see the appeal of the Chellomedia purchase given the increasing maturity of the American cable market, he would have preferred to see AMC return capital to shareholders and shrink its equity base.
Greenfield added that it was somewhat disconcerting to see that AMCN “is decisively in growth mode, even before [its] next leg of original programming has proved itself.” Next up for AMC are Turn, an historical drama based on the Alexander Rose book Washington’s Spies, and Halt & Catch Fire, a strip set in Texas’ Silicon Prairie in the 1980s. Both series are expected to bow in 2014.
The deal was brokered by Guggenheim Securities, a subsidairy of Guggenheim Partners, which owns Adweek.
Source: Adweek, 10/28/13