Discovery circles ProSieben nets

Discovery Communications is leading the race to complete a €1.3bn (US$1.68bn) buy-out of ProSieben’s channels in Scandinavia, according to a report.

Germany-based ProSieben is looking to offload its SBS Broadcasting channels in the region – including Sweden’s Kanal 9, TV Norge in Norway and Kanal 4 in Denmark – to pay off debt.

Germany’s Der Spiegel magazine reported over the weekend a deal could be concluded as early as this week, with Discovery believed to be leading the way.

Scandinavian broadcast giant Modern Times Group has previously declared an interest in the channels but was seen as something of an outside bet because of the region’s competition laws.

Private equity firm Providence Equity Partners is still in the running but Discovery is said to be close to concluding a deal.

ProSieben, which is 53%-owned by private equity groups KKR and Permira, bought SBS Broadcasting in 2007.

The €3.3bn takeover made it Europe’s second-largest broadcaster, behind Luxembourg-based RTL Group, but also saddled it with significant debts, with which it has struggled ever since.

The SBS channels in Netherlands and Belgium were sold for €1.23bn in August last year to Finnish-based Sanoma and Dutch-prodco Talpa Media reducing the debt to €2.4bn.

Analyst Will Smith from investment bank Jefferies & Co told C21 that the deal would leave ProSieben heavily reliant on its businesses elsewhere in Europe which are struggling to expand at the same rate as those in the Scandinavian market.

He said: “It’s going to make them a lot more reliant on Germany and Eastern Europe which are both struggling to find a footing. If they let the Scandi assets go it calls into question where the future growth for this business is going to come from.”

If concluded, the move would be the latest in a spate of international expansion deals for Discovery.

It purchased Dubai-based media company Takhayal Entertainment last month and also began talks with French broadcaster TF1 about potential strategic partnerships.

ProSieben and Discovery Communications both declined to comment.