ITV to Buy ‘The Voice’ Creator Talpa for Up to $1.2 BillionElco van Groningen
ITV Plc, Britain’s largest commercial broadcaster, agreed to pay as much as 1.1 billion euros ($1.2 billion) to acquire Talpa Media BV, the producer of “The Voice” singing competition.
Dutch billionaire John de Mol, who created one of the first modern-day reality TV shows “Big Brother’ and founded Talpa in 2004, will initially receive 500 million euros in cash, London-based ITV said Thursday. Additional payments will depend on Talpa’s business performance, and ITV will use a mixture of cash and debt to finance the transaction.
Under Chief Executive Officer Adam Crozier, ITV is expanding in content production to complement its U.K. channels. Talpa will strengthen the ITV Studios arm, which has key offices in the U.S. and U.K. Some of ITV’s popular shows include ‘‘Mr Selfridge” starring Jeremy Piven, and long-running soap opera “Coronation Street.”
“It makes ITV into a truly global force in content,” Ian Whittaker, an analyst at Liberum Capital Ltd., said in a note.
ITV shares rose 1.1 percent to 249.80 pence at 11:39 a.m. in London, taking the advance to 26 percent in the past 12 months.
European media and production houses have been joining forces in recent years and ITV itself has long been cited by analysts as a potential target, given its production capabilities and relatively small amount of debt.
All3Media, the U.K.’s largest independent production company, was bought by Discovery Communications Inc. and Liberty Global Plc in May for 550 million pounds ($825 million).
ITV’s content ranges from TV comedies, talk shows, reality programs to drama. The broadcaster is stepping up investments as consumers increasingly watch shows on computers, tablets and smartphones and as new video-streaming services allow access at any time.
The initial 500 million-euro payment is equal to just more than two times the target’s 2014 revenue and eight times earnings before interest, taxes and amortization, according to Liberum Capital’s Whittaker. The transaction is expected to be completed in the second quarter.
The additional amounts will be payable over the next eight years depending on Talpa’s earnings.
In a note today, Moody’s Investors Service said Talpa’s revenue is heavily concentrated on a single program format and the use of debt to finance the deal will lead to “some deterioration” in ITV’s “currently strong credit metrics.” Moody’s ranks ITV’s debt Baa3, the lowest investment grade.
Bank of America Merrill Lynch and Freshfields Bruckhaus Deringer advised Talpa.