TV3 deal is another content play for Liberty Global
The latest chapter in the 17-year-old TV3’s history has come much later than expected
“The only way you achieve growth in broadcasting is by investing in content,” says TV3 chief executive David McRedmond. Photograph: Bryan O’Brien / The Irish Times
When Doughty Hanson bought TV3 in 2006, nobody ever expected that in 2015 it would still be its owner. This was a private equity play. The idea was to make TV3 bigger and stronger, then flip it on at a profit within a few years: 2009 and 2010 were mentioned as exit dates.
Instead, a recession kicked in, and advertising revenues evaporated at an alarming pace. From that point, it could only ever sell at a loss, if it could find a buyer at all.
TV3’s acquisition of its debts (with a write-down) from Irish Bank Resolution Corporation in late 2013 was an important step, and when Doughty Hanson announced earlier this year that it was to wind down the investment fund that contained TV3 Group, it was official: TV3 was on the blocks.
The sale price of €87 million, with €7 million of contingent on TV3 reaching certain targets, is a third of the bubbly €265 million price-tag Doughty Hanson paid nine years ago.
Still, €87 million, which is also lower than some sums that were speculated, is probably a fair price at a time when the market is beginning to recover, but certain things remain in flux.
While UTV Ireland might not be having a happy time of it, its entry into the market has affected TV3. The loss of cash cows Coronation Street and Emmerdale has hurt, and greater investment in “banker” content will be required.
Reassuringly, new owner UPC Ireland, a subsidiary of US cable giant Liberty Global, has signalled that it wants TV3 to continue with its home-production strategy – though presumably imports, such as the newly acquired Big Brother, will still find a home given that they pull in viewers.
In an example of just how closely media companies are related, Liberty Global recently became the co-owner of “super-indie” producer All3Media, which is in turn the owner of Company Pictures, the co-producer of TV3’s soap Red Rock.
“The only way you achieve growth in broadcasting is by investing in content,” says TV3 chief executive David McRedmond. Liberty Global’s recent acquisition strategy – it has also picked up a 6.4 per cent stake in ITV plc and Belgium’s De Vijver Media – suggests it agrees.
The scale of Liberty Global may also prove beneficial to TV3, which would dearly love to make more money from international sales and distribution. But industry-watchers, like TV3 viewers, will have to wait until the deal is cleared to find out what its new owner really wants to do with the business.