US media company Sinclair Broadcast Group has agreed a $350m (€323.4m) deal to acquire pay-television broadcaster the Tennis Channel.
Sinclair, which owns, operates or provides services to 171 television stations in 81 markets, said it estimates the deal will reduce future tax payments by about $65m as it carries forward over $200m of Tennis Channel’s net operating losses.
Tennis Channel is majority owned by private-equity firms Apollo Partners, Bain Capital Ventures, Battery Ventures, CCMP Capital and Columbia Capital. Satellite television providers DirecTV and Dish Network also own small stakes in the broadcaster.
Tennis Channel, which launched in 2003, also includes over-the-top subscription services in the shape of TC Plus and TV Everywhere, and holds rights to 90 per cent of all televised tennis in the US.
The broadcaster last week signed a multi-year rights deal with Tennis Australia, the governing body of professional tennis in Australia. The agreement included all domestic media rights to five annual events leading up to the first grand slam of the year in Melbourne, along with access to historical matches from the Australian Open library and ongoing collaboration on original programs.
Sinclair was first linked to a move for Tennis Channel in September. The company said it has already negotiated agreements with a number of multi-channel video programming distributors which, following Sinclair’s acquisition, will increase carriage of Tennis Channel from approximately 30 million US homes to approximately 50 million homes.
David Smith, president and chief executive of Sinclair, said: “Tennis Channel is an established property with high-quality content and advertisers, and is vastly under-compensated and under-distributed relative to the value it brings to its viewers. It was the only independently-owned major sports network left, and we knew we could unlock value through a tuck-in acquisition.
“The additional subscriber base, which has already been contracted, equates to the creation of approximately $200m of incremental value at closing. Furthermore, we expect this combination to create additional linear and OTT viewership and advertising growth, and we have the added benefit of continued involvement of Ken Solomon, CEO of Tennis Channel, and a seasoned programming executive.”
Solomon added: “Sinclair’s unique size and position in the media ecosystem will facilitate significant distribution growth towards parity with our competitive set and expand our brand’s assets and unique value as the go-to destination for all things tennis in the US and beyond. The larger platform will immediately help develop incremental advertising and sponsorship business and puts us in a great position to enhance our already comprehensive rights portfolio domestically as well as develop the brand internationally.
“We also intend to utilise Sinclair’s advanced branding capabilities, digital expertise and significant broadcast asset platform to drive increased awareness for both Tennis Channel and our successful subscription-based OTT platform, Tennis Channel Plus.”
The takeover, which is subject to antitrust regulatory approval and other customary closing conditions, is expected to close during the first quarter of 2016.