Fitch: AMC Acquisition of Chellomedia is Strategically Sound
NEW YORK -- October 30, 2013
The pending acquisition of Chellomedia (the international content division of
Liberty Global PLC) enables AMC Networks (AMCX) to expand its international
distribution capabilities and grow its international business, according to
Fitch Ratings. The proposed transaction is expected to boost AMCX's
international revenue generation to approximately 25% of total revenues,
providing business diversification that will strengthen the company's credit
International markets represent compelling revenue and cash flow growth for
AMCX as the company capitalizes on its global brands and leverageable content.
The demand for high-quality content by international broadcasters and pay-TV
providers positions media companies like AMCX to further monetize their
content in international markets.
This transaction provides AMCX with sufficient international scale and scope,
affording the company a wide spectrum of options regarding its international
distribution strategy. Chellomedia's television channels and cable networks -
most of which are movie and entertainment networks - reach approximately 390
million households in 138 countries.
AMCX can determine how to best monetize its increasingly popular original
content either through distribution on its own networks around the world or
through licensing agreements with international networks. Distributing
original content on its own networks enhances the value of the brands and the
networks, which will position AMCX to grow international affiliation fee and
Meaningful execution risks are associated with international expansion,
including differences in entertainment consumption trends, political
instability, uncertain or less developed regulatory regimes and variations in
competitive dynamics (state-owned competitors). However, Fitch believes this
risk could slow growth rates rather than pose significant operating pressures
as AMCX's international exposure is relatively modest at below 30%.
Additional information is available on www.fitchratings.com.
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David Peterson, +1 312-368-3177
Corporates, Telecom and Cable
70 W. Madison Street
Chicago, IL 60602
Kellie Geressy-Nilsen, +1 212-908-9123
Fitch Ratings, Inc.
Brian Bertsch, +1 212-908-0549
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