Bell Media announced Thursday that it has sold three youth-focused specialty TV channels to Halifax-based DHX Media for $170 million in cash. The transaction is expected to close in 2014 pending CRTC approval.
The deal includes the commercial-free services Family Channel and Disney Junior (French and English) and the ad-supported Disney XD channel. Bell agreed to sell the channels earlier this year in order to get the Competition Bureau’s blessing for its $3.38 billion acquisition of Astral Media.
Bell directed all media enquiries to DHX, but president Kevin Crull said in a release that he has the “utmost confidence” the brands will “continue to flourish and enrich our television industry.”
DHX specializes in the creation, production and licensing of family entertainment rights. It operates several marquee children’s brands including Caillou, Teletubbies and Inspector Gadget. The Bell deal represents its first foray into broadcasting.
“We believe that through the acquisition of these tremendously powerful Canadian brands, we will be able to accelerate the development and monetization of our world-leading library of children’s brands,” said DHX CEO Michael Donovan during a conference call this morning. “We are very excited about this next stage of growth.”
Family Channel is the most watched children’s channel in Canada, with 5.7 million subscribers and mandatory carriage on Canadian BDUs.
“All three areas of our business (content production, library and distribution and merchandising and licensing) are strengthened by this acquisition,” said Donovan.
CFO Dana Landry said that the purchase is both strategically and financially compelling, complementing DHX’s existing business while providing a recurring revenue stream and revenue diversification. Financially, the deal is expected to increase its revenues for the past 12 months by 70% on a pro-forma basis, from $110 million to $191.5 million.
DHX has made a concerted effort to strengthen its content library this year. In September, it acquired Ragdoll Worldwide, which owns the Teletubbies and In the Night Garden children’s brands, from BBC Worldwide and a partnered organization for an estimated $28.4 million.
The acquisition gave DHX 365 episodes of Teletubbies, 52 episodes of Teletubbies Everywhere and 100 episodes of In the Night Garden.
Donovan told analysts during a conference call this morning that he hoped the federal regulator would look favourably on the deal given that DHX is a new player in the broadcast sector. “We are a new voice in the broadcast spectrum in Canada, and we believe that will be well-received,” he said. “Although these things are impossible to predict.”
