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Scripps confirms UKTV buy-out

US cable group Scripps Networks Interactive has agreed to acquire Virgin Media’s stake in UKTV in a deal worth £340m (US$553.5m).

The Knoxville-based owner of channels including the Food Network, the Travel Channel and DIY Network, will pay £239m for Virgin’s 50% equity interest in UKTV, plus £100m to acquire the outstanding preferred stock and debt owed by UKTV to Virgin.

Scripps last week appeared to pour cold water on the idea of any significant acquisitions, but today confirmed a move reported on by C21 last month.

The deal will see Scripps continue to operate UKTV as a joint venture with its other 50% shareholder, BBC Worldwide (BBCWW). The business comprises 10 cabsat networks: Home, Good Food, Dave, Watch, Gold, Alibi, Eden, Blighty, Yesterday and Really.

As part of the transaction, Scripps and BBCWW are negotiating an arrangement that would give the latter the option to build up its interest to 60% of the venture. This would be achieved via a combination of cash and a package of digital rights for UKTV.

“UKTV is a significant opportunity for Scripps Networks Interactive to participate in a thriving multi-channel, dual revenue stream media business in one of the world’s largest television markets,” said Scripps chairman, president and CEO Kenneth Lowe.

“Making a solid investment in UKTV and entering into a strong partnership with BBC Worldwide reinforces our core international strategy which we believe will create significant long-term value for our shareholders.”

The company already has a presence in the UK through its Liberty Global joint-venture cabsat channel Food Network and has been busy rolling this out around the world. Attempts to break into India last year through a planned JV with NDTV Group fell through but the territory is still on the agenda.

BBCWW CEO John Smith said of the new deal: “The launch of UKTV in 1997 created a new secondary platform for content from the BBC and UK independents that has delivered great value back to all stakeholders. We thank Virgin Media for the part it has played in developing the business into one of the most successful pay TV companies in the UK.

“We welcome Scripps Networks Interactive as our new partner and look forward to working with them to open up further avenues to success.

“The new agreement we are developing will bring benefits to UKTV’s audiences in the way they can consume content and will help to sustain UKTV’s track record of growth. It will create the opportunity to drive further value from digital rights on behalf of our stakeholders, particularly our shareholder, the BBC.”

Virgin Media CEO Neil Berkett said that the sell-off, which follows the firm’s £160m disposal of its wholly-owned channels portfolio to BSkyB last year, would allow the cableco to focus on infrastructure, “providing a transformative experience for our customers by developing our core strategic strength – the UK’s leading digital network – alongside our leading entertainment services.”

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