Clearly someone thinks the future of British TV’s looking bright. US television company Scripps Networks, which runs the DIY network and the Cooking Channel, has bought Virgin Media’s 50% stake in UKTV for a total of £339m as it looks to increase its foothold in Europe.
Almost £240m will be paid in cash by Scripps for the stake in UKTV, owner of the Gold channel. The remaining £100m will buy up the debt owed by the channel to Virgin Media and will also be used to acquire any outstanding stock.
You could say it’s been a while coming. Talks have been going on for a year now between the two media groups to try and thrash out the complex negotiations. Nonetheless Scripps stood firm, keen to ‘participate in a thriving multi-channel, dual revenue stream media business in one of the world's largest television markets,’ Kenneth Lowe, chairman, president and chief executive of Scripps said. It’s now negotiating an agreement that may give BBC Worldwide the option to increase its shareholding in UKTV from 50% to 60%.
UKTV was formed in 1997 under a partnership between Virgin Media and BBC Worldwide, the Beeb’s commercial ‘aunt.’ Since then, the pay-TV network has grown to become one of Britain’s biggest television companies. It owns 10 channels, including Dave, Gold and Good Food and attracts around 36m viewers.
Virgin Media, meanwhile, has been steadily offloading its channels, wanting to concentrate on digital content and high speed broadband instead. Last year it sold the Living, Bravo and Challenge channels to BSkyB for £160m. Neil Berkett, Virgin Media’s chief executive, said at the time that the sale would allow the media group to focus more closely on exploiting its ‘superfast connectivity’ to ensure a ‘highly versatile next generation entertainment application.’
But while Virgin Media pegs its future on distribution, clearly Scripps thinks there’s still life in the content arm of the media industry. Perhaps it’s hoping the subscription payment for consumers will help offset some of the damage done to advertising revenue during the recession.