The transaction brings Viacom one of British television's biggest brands, and the only commercial public service broadcaster (PSB) to consistently grow viewership share in recent years. Channel 5's diverse programming slate is viewed by more than 80% of the UK population each month, benefits from the programming grid prominence associated with its public service broadcaster status, and will complement Viacom's popular pay TV networks, which connect with focused and valuable audiences.
The acquisition of Channel 5 builds on Viacom's long and successful track record of investment in the UK. The company launched MTV in the market in 1987, followed by Nickelodeon in 1993 and Comedy Central in 1995 (as Paramount Channel and Paramount Comedy), growing to more than 20 branded TV networks currently on air, including BET, VIVA and VH1. Viacom's continued growth resulted in it being the most successful international supplier of pay TV channels to the UK market in 2013. MTV enjoyed its highest ratings in eight years in 2013, while Nickelodeon and Comedy Central were also among the top networks for their target demographics.
Under the terms of the agreement, Viacom will acquire all brands and assets of Channel 5 Limited, including:
* Channel 5 launched as the UK's fifth public service broadcaster in March 1997. Over 42 million UK viewers watch Channel 5 in any given month tuning in to programming as diverse as "The Gadget Show", "Big Brother", "Home and Away", "Neighbours", "Under the Dome", "Ice Road Truckers", the "CSI" franchise, "5 News" and the award winning children's strand, "Milkshake!".
* 5* launched as Five Life in October 2006, becoming FIVER in April 2008 and 5* in March 2011. The channel attracts a growing audience of younger viewers with a targeted mix of films, and acquired and original programming.
* 5USA launched in October 2006 and is the 11th highest rating multichannel in the UK during prime time. The network showcases American programming including "CSI", "CSI New York", "CSI Miami", "Person of Interest", "NCIS", "The Mentalist" and films.
* Milkshake! is one of the commercial brand leaders for pre-school children's programming in the UK, broadcasting a morning block throughout the week that features many of the world's favorite pre-school characters, including "Peppa Pig", "Bert and Ernie", "Noddy" and others. The Milkshake! website is a popular destination for kids, and the brand has a strong track record of producing live children's entertainment events in the UK.
* Demand 5 is Channel 5's video-on-demand (VoD) service, which is offered on more viewing platforms than any other commercial broadcaster in the UK, and delivered over 23 million views in January 2014.
The purchase price of the acquisition will be financed by Viacom's existing cash balances and the transaction is expected to be accretive immediately after closing. The transaction is subject to customary regulatory approvals.
Original Viacom International Media Networks (VIMN) Press Release:
Viacom International Media Networks to Acquire Channel 5 Broadcasting for £450 Million
* Deal will Improve Content Offering for UK Viewers Across Channel 5 and Viacom Networks
* Combination with UK's Largest Privately Owned Public Service Broadcaster to Enhance Distribution Opportunities for Viacom Content
* Acquisition Builds on Viacom's Long Track Record of Successful Investment in the UK
LONDON & NEW YORK, 1 May 2014 - Viacom Inc. (Nasdaq: VIAB, VIA) and Northern & Shell Media Group today announced a definitive agreement for the acquisition of Channel 5 Broadcasting Limited by Viacom International Media Networks (VIMN) for £450 million (approximately $757 million).
The transaction brings Viacom one of British television’s biggest brands, and the only commercial public service broadcaster to consistently grow viewership share in recent years. Channel 5’s diverse programming slate is viewed by more than 80% of the UK population each month, benefits from the programming grid prominence associated with its public service broadcaster status, and will complement Viacom’s popular pay TV networks, which connect with focused and valuable audiences.
"The acquisition of Channel 5 accelerates Viacom's strategy in the UK, one of the world's most important and valuable media markets," said Viacom President and CEO Philippe Dauman. "Channel 5's momentum is indisputable, with impactful programming, increasing popularity and a growing digital platform. Channel 5's management and employees have done an outstanding job building their brand and we are pleased to welcome them to our team. Viacom's global resources, technology and expertise will help Channel 5 develop even more compelling programming and provide content to consumers in exciting new ways. In addition, we will introduce our popular content to new UK audiences and create a comprehensive offering for our commercial partners on-air and on-line.
"This deal will dramatically increase Viacom's investment in content produced in the UK, which has a widely admired public service broadcasting culture and a globally influential production sector. We look forward to partnering with local producers to introduce more UK-created content to global audiences, and will continue to explore opportunities in the UK, both in the free-to-air and pay television markets."
Paul Dunthorne, Chief Operating Officer of Channel 5, said, "Since Northern & Shell's acquisition of Channel 5 in 2010, the financial and operating performance of the business has been transformed with improved audiences and content offering. The combination of Channel 5 with Viacom's global resources, technology and expertise adds further to the momentum of the business and offers numerous exciting opportunities for the channel's future."
The acquisition of Channel 5 builds on Viacom’s long and successful track record of investment in the UK. The company launched MTV in the market in 1987, followed by Nickelodeon in 1993 and Comedy Central in 1995, growing to more than 20 branded TV networks currently on air, including BET, VIVA and VH1. Viacom’s continued growth resulted in it being the most successful international supplier of pay TV channels to the UK market in 2013. MTV enjoyed its highest ratings in eight years in 2013, while Nickelodeon and Comedy Central were also among the top networks for their target demographics.
Under the terms of the agreement, Viacom will acquire all brands and assets of Channel 5 Limited, including:
* Channel 5 launched as the UK’s fifth public service broadcaster in March 1997. Over 42 million UK viewers watch Channel 5 in any given month tuning in to programming as diverse as The Gadget Show, Big Brother, Home and Away, Neighbours, Under the Dome, Ice Road Truckers, the CSI franchise, 5 News and the award winning children's strand, Milkshake!
* 5* launched as Five Life in October 2006, becoming FIVER in April 2008 and 5* in March 2011. The channel attracts a growing audience of younger viewers with a targeted mix of films, and acquired and original programming.
* 5USA launched in October 2006 and is the 11th highest rating multichannel in the UK during prime time. The network showcases American programming including CSI, CSI New York, CSI Miami, Person of Interest, NCIS, The Mentalist and films.
* Milkshake! is one of the commercial brand leaders for pre-school children’s programming in the UK, broadcasting a morning block throughout the week that features many of the world’s favorite pre-school characters, including Peppa Pig, Bert and Ernie, Noddy and others. The Milkshake! website is a popular destination for kids, and the brand has a strong track record of producing live children’s entertainment events in the UK.
* Demand 5 is Channel 5’s video-on-demand service, which is offered on more viewing platforms than any other commercial broadcaster in the UK, and delivered over 23 million views in January 2014.
The purchase price of the acquisition will be financed by Viacom’s existing cash balances and the transaction is expected to be accretive immediately after closing. The transaction is subject to customary regulatory approvals.
About Viacom International Media Networks
Viacom International Media Networks (VIMN), a unit of Viacom Inc. (NASDAQ: VIA, VIAB), is comprised of many of the world's most popular multimedia entertainment brands, including MTV, Nickelodeon, Comedy Central, BET, Paramount Channel, VH1, VIVA, COLORS, Game One and Tr3s: MTV, Música y Más. Viacom brands are seen globally in more than 600 million households in 170 territories and 37 languages via more than 200 locally programmed and operated TV channels and more than 550 digital media and mobile TV properties. For more information about Viacom and its businesses, visit www.viacom.com. Keep up with Viacom news by following Viacom's blog at blog.viacom.com and Twitter feed at www.twitter.com/Viacom.
About Channel 5
Channel 5 launched as Britain's fifth public service broadcaster in March 1997 and was bought by Northern & Shell in July 2010. It currently attracts well over 42 million viewers a month. It delivers programmes that combine creative flair and popular appeal, and continues to bring viewers a mix of smart new shows that sit alongside popular long running series such as Ben Fogle's Animal Clinic, Killers Behind Bars, and The Hotel Inspector . Big Brother and Celebrity Big Brother are well established in the schedule with entertainment at their core. They sit alongside ratings stalwarts like Eddie Stobart: Trucks and Trailers and The Hotel Inspector. Channel 5 acquires the best of international drama including Wentworth Prison, Under the Dome, Person of Interest, and The Mentalist, as well as Aussie soaps Neighbours and Home and Away. For sports fans, Channel 5 is the free-to-air home of all England Cricket domestic summer Internationals and regular title boxing. Channel 5 News delivers the news and debates the main topics of the day. The channel is committed to children's programing with their award winning strand Milkshake!. Sister channels 5* and 5USA compliment Channel 5 with a mix of must see entertainment and US Drama including American Idol and the CSI franchise. Demand 5 is a free service to catch up with the latest programmes on Channel 5, 5USA and 5* available to watch whenever you want together with an archive of classic shows. It is available across platforms and devices including Virgin Media, BT Vision, Xbox1, iOS, You View, Sky On Demand, Android, Freesat, PS4, and Roku. For all the latest about Channel 5, follow us on twitter.com @channel5press and @channel5_tv.
About Northern & Shell
Northern & Shell Media Group is present in several major areas of consumer publishing and has a diverse portfolio of interests across print, television, new media, distribution, investment and property. The portfolio includes four UK national newspaper titles - the Daily Express, Sunday Express, Daily Star and Daily Star Sunday, celebrity magazines OK!, new! and Star, and the Health Lottery. It is also a 50% joint venture partner in the Irish Daily Star.
About Viacom
Viacom is home to premier global media brands that create compelling television programs, motion pictures, short-form video, apps, games, consumer products, social media and other entertainment content for audiences in more than 160 countries and territories. Viacom's media networks, including MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Nick Jr., TeenNick, Nicktoons, Nick at Nite, Comedy Central, TV Land, SPIKE, Tr3s, Paramount Channel and VIVA, reach approximately 700 million households worldwide. Paramount Pictures, America's oldest film studio, is a major global producer and distributor of filmed entertainment.
For more information about Viacom and its businesses, visit www.viacom.com. Keep up with Viacom news by following Viacom's blog at blog.viacom.com and Twitter feed at www.twitter.com/Viacom.
Viacom Cautionary Statement Concerning Forward-Looking Statements
This news release contains both historical and forward-looking statements. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements reflect our current expectations concerning future results, objectives, plans and goals, and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause future results, performance or achievements to differ from forecasts. These risks, uncertainties and other factors include, among others: the public acceptance of Channel 5's programming in the United Kingdom (UK); technological developments and their effect on the UK markets and on consumer behavior; competition for audiences and distribution; the impact of piracy; economic conditions in the UK generally, and in advertising and retail markets in particular; changes in applicable UK laws and regulations, particularly regarding public broadcasting, foreign investment and the nature and amount of advertising that may be included in programming; and other economic, business, competitive and/or regulatory factors affecting businesses in the UK generally. The forward-looking statements included in this document are made only as of the date of this document, and we do not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances. If applicable, reconciliations for any non-GAAP financial information contained in this news release are included in this news release or available on our website at http://www.viacom.com.
Contacts
Viacom
Jeremy Zweig, +1 212-846-7503
[...]
or
Viacom International Media Networks
Matt Baker, +44 203 580 2101
[...]
or
Northern & Shell / Channel 5
Mimi Turner, +44 (0) 20 8612 7030
Also, from Broadcast:
Analysis: Viacom's C5 strategy under the microscopeAlso, from Broadcast:
Viacom believes the Channel 5 brand has huge potential and that it can grow its share by investing in original content.
The C5 brand will be retained by Viacom, which believes it can supercharge the broadcaster’s existing momentum.
VIMN chief executive Bob Bakish and VIMN UK managing director David Lynn sent C5 staff a reassuring “business as usual” earlier today, and it is not expected to usher in any sudden strategy or personnel changes.
It is thought that Viacom has plenty of admiration for the job done by C5’s management team and is inclined to retain the likes of Ben Frow, currently C5 director of programmes. It will also look to secure key C5 programming brands, most notably Big Brother.
There is a general expectation that Viacom will spend more on originations than Northern & Shell has in recent years.
While there are no guarantees, the toe-in-the-water commissioning strategies for channels such as Comedy Central make more economic sense if they are supplemented by a major free-to-air network.
Viacom plans to leverage that increased investment by playing content it orders for Channel 5 on its other stations around the world, including in the US.
While the £450m deal may not be financially transformative for a company of Viacom’s vast scale, strategically it is hugely significant.
Viacom has free-to air-assets in some major territories, including Nickelodeon in Germany and Paramount Channel in Spain, but it is primarily a pay operator and does not own a mainstream general entertainment channel akin to Channel 5.
It has been widely expected that Sky Media will take over the C5 sales account, and while this remains a possibility, it is not a foregone conclusion.
It is thought that Viacom has been impressed by C5’s in-house sales division and changes are unlikely in the short term. Viacom could choose to hand sales for its 20 UK pay channels to the C5 division, to sell across pay and free-to-air.
It is not yet clear whether Viacom will look to relocate C5 to its Camden headquarters.
Viacom’s vision for Channel 5Also from Broadcast:
Viacom is keen to bolster links between its US and UK assets once it completes its £450m acquisition of Channel 5, ramping up coproduction opportunities between the British broadcaster and the likes of MTV, Comedy Central and Nickelodeon.
The US giant has committed to boosting C5’s spend on originations, but will do so with one eye on its global network.
Viacom chief executive Philippe Dauman said: “There’s a lot of possible co-operation between the US and the UK in both directions for Channel 5.”
MTV US is developing more scripted content, such as a remake of horror fi lm Scream, and male-skewing stablemate Spike TV is working on a 6 x 60-minute drama about ancient Egyptian king Tutan khamun. Both could play on C5, alongside younger-skewing comedies such as Comedy Central’s Amy Poehler-produced Broad City.
The Viacom deal also paves the way for originated scripted series to return to C5, with UK projects receiving backing from US channels, and for C5’s reality and popular factual shows to air overseas.
Viacom’s US channels, particularly MTV, have commissioned a slew of content from British indies in recent months, including Alaskan reality series Slednecks from All3Media America, One Bad Choice from Optomen and competition series Beyond Dance from Zodiak USA, while key supplier 495 Productions, which makes Jersey Shore, has been acquired by UK-based Fremantle Media.
One indie boss with several projects in development across MTV’s US channels said it will be interesting to see whether any of these projects migrate back to the UK. “Historically, there’s not been too many links between MTV in the US and the commissioners in the UK,” said the producer.
There will also be scope for C5, MTV and Comedy Central to work together on acquisitions. Viacom will look to bolster C5’s daytime acquisitions, which largely comprise older series such as Columbo.
Many of C5’s major US acquisitions, such as CSI: Crime Scene Investigation and NCIS, are sold globally by CBS Studios International, a sister company to Viacom, also owned by Sumner Redstone, meaning that they are unlikely to be affected by a change in ownership.
OWNERSHIP: WHO IS SUMNER REDSTONE?
Viacom owner and executive chairman Sumner Redstone is a mercurial fi gure in American media. The 90-yearold billionaire owns both Viacom (including the Paramount movie studio) and CBS, the US broadcast network and studio operated by Les Moonves.
Viacom chief exec Philippe Dauman is widely considered to be Redstone’s chief lieutenant, although he does not possess the showbusiness sparkle of Moonves.
Redstone has had corporate tussles with Rupert Murdoch, John Malone and Barry Diller over the years, and famously fi red MTV boss Tom Freston after he failed to buy social networking site MySpace.
VIACOM: A MAJOR PLAYER IN THE US
Selling C5 for £450m represented a tidy profit for Northern & Shell, but the deal was small fry for Viacom. The latter turned over $2.38bn (£1.44bn) in the last quarter, generating profits of $502m (£303m). It also operates in a US market in which channel deals can be far larger. Scripps paid $1.1bn (£666m) for 65% of the Travel Channel in 2009, for example.
C5 deal opens door for PactAlso, from TBI Vision:
Viacom’s acquisition of Channel 5 represents an opportunity for new terms of trade to be struck between Pact and the UK broadcaster.
Relations between previous owner Northern & Shell and Pact had become strained and terms of trade negotiations broke down last year. Viacom is expected to be a tough negotiator, but is likely to bring a more collaborative approach to talks once the deal closes, which could take between three and six months.
There have been fears that C5 could become purely a depositary for US series under Viacom, but this will not be the case. The group told US analysts it is committed to ordering originations for C5, and one of the prerequisites of the 10-year licence that Ofcom awarded C5 last year was that it airs at least 50% original commissions.
Viacom will look to take more international rights for such commissions, to play them across its global portfolio of channels, particularly in Europe and Australia. But it knows it will have to pay for those rights and does not want to “frighten the horses” in the indie sector, and hopes they will buy into the opportunities Viacom offers.
One example of the indie perspective came from Firecracker Films managing director Sue Oriel. She said: “My biggest concern will be the potential erosion of terms of trade; while C5 maintains its terrestrial licence, these should apply, but Viacom surely will wish to retain rights to supply its other global networks.”
The MTV owner stressed that it wants to strengthen its ties to the “vibrant” UK production marketplace. “We believe that we will be able to invest in more programming for Channel 5 that will make the channel even more vibrant and utilise some of that programming on our UK pay channels and, even more importantly, on our existing and future networks around the world,” said Viacom chief executive Philippe Dauman.
Viacom will not “rip up” the existing structure of the C5 commissioning team, led by director of programming Ben Frow, and while there will be a more joined-up commissioning process between C5 and Viacom’s pay channels, there is unlikely to be a centralised commissioning process.
MTV, Comedy Central and Nickelodeon will continue to commission content in the UK, but will likely carve out a terrestrial window for their shows.
Nickelodeon will work more closely with C5’s Milkshake! brand, and Comedy Central, which has been aggressively ramping up its original slate with series such as Big Talk’s Mummy’s Boys and Clerkenwell Films’ Medics, will benefit from a wider window, given the cost of such shows.
UK indies seek dialogue with new Channel 5 owner Viacom
Independent producers in the UK are seeking to meet with top executives from new Channel 5 owner Viacom to discuss programming plans and build relationships.
UK indies trade body Pact yesterday issued a release that said the sector would seek to meet Viacom “very soon”.
The body noted indies had regularly met with Northern & Shell, Channel 5’s previous owner. However, some indies have privately complained about Northern & Shell’s tough terms of trade.
“I am sure indies will see Channel 5’s acquisition as an opportunity to do business with one of the world’s biggest media companies,” said Pact CEO John McVay. “Historically, Channel 5 has been the home for content from many of the UK’s independent production companies.
“We hope that we can start a positive dialogue with Viacom as soon as possible, in the same way that indies have worked so successfully with other UK public service broadcasters.”
New York-based Viacom, which owns Nickelodeon, Comedy Central and MTV, acquired Channel 5 for £450 million (US$760 million) earlier this month, subject to regulatory rubberstamps. This made it the latest US media group to buy into the UK TV market.
Viacom expects Channel 5 will boost the group’s international programme sales and create a new pipeline of original content for other networks in the stable.
UK indies will seek to use Viacom’s ties to the US market to boost their own stateside business, Pact noted. “The US broadcasters are very familiar with British creative content and programming from UK indies has never been in greater demand from American interests.”
In related news, Channel 5 has commissioned UK indie Barcroft Productions and Shine International to produce OAPs Behaving Badly, which is a 1x60mins doc about pensioners who act anti-socially in Tenerife. Characters include a 74 year-old [...], a granddad who has blown his family inheritance working at a bar and a grandmother who parties with friends half her age.
Guy Davies, commissioning editor, factual and features at Channel 5, said: “These entertaining and larger than life characters will capture viewers’ imagination and open their eyes to how some choose to spend their twilight years.”
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