Market Insight

Liberty Global sells channel division to AMC Networks

February 03, 2014  | Subscribers Only

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AMC Networks Inc. has completed its purchase of Liberty Global’s content division which the U.S. cable giant has been looking to sell since early 2013. The deal is valued at €750m  ($1,011 million) and will bring 394m households in 138 countries to the U.S. based entertainment company. Chellomedia created $514m in revenue for the year ending September 2013, meaning a revenue to value ratio of around 2:1. The deal includes content divisions; Chello Central Europe, Chello Latin America, Chello Multicanal and Chello Zone, with Atmedia giving AMC an advertising sales business and Amsterdam based Chello DMC will see the content focussed company breaking new ground in playout and broadcasting. Liberty Global retains its Dutch premium channel businesses consisting of Film1 and Sport1. The sale comes as Liberty Global is focussing on the operational side of its business with purchases of UK cable company Virgin Media, Dutch Operator Ziggo (pending EC approval) and a failed bid for German KDG.

AMC networks already own a small number of US cable channels; AMC, IFC, WE tv and Sundance channel.Recently AMC has been investing in developing the international reach of acquired Sundance channel via European deals in Spain and Poland, and also gaining access to 17.2m households across Latin America via an agreement with DirectTV.

Despite this, international distribution still only makes up around 10% of AMC global channel revenue; due mainly to the lack of distribution of AMC owned channels. Traditionally in Europe AMC has sold much its content via deals with 3rd party channels such as Fox, Orange, TCM and Sky Atlantic and following the first window, through agreements with OTT operators Netflix and Lovefilm. The acquisition of Chellomedia not only gives AMC control of a wide distribution and diverse range of channels but crucially it gives the company access to more than 200m (IHS estimate) European households, and the ability to distribute own brand content on own brand channels. The company has made it clear following the acquisition that their international strategy hinges upon distributing in exactly this way. While in some major markets, it will remain advantageous to keep existing deals with big names and content gatekeepers; Sky Atlantic in the UK and Orange in France, expect to see AMC leveraging the recognised ‘AMC Presents’ branding in smaller and less consolidated markets, both to raise the profile of existing Chellomedia Channels and to utilise a pre-existing distribution network. As an added benefit the diversification of the company’s assets will also make AMC less reliant on the U.S.,not only is it more resilient to U.S. market fluctuations, but also has a chance to further diversify its existing content business by providing content for its newly acquired European channels base.


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