Wednesday, November 17, 2010

BBC to Sell Discovery Its Stake in Joint Venture

PARIS — Discovery Communications, the U.S. operator of science and entertainment television channels, stepped up its expansion plans Monday, saying it had agreed to buy out the BBC’s 50 percent stake in their international joint venture.

Discovery said it would pay $156 million to BBC Worldwide, the commercial arm of the publicly financed BBC, for its half ownership in the venture, which operates the Animal Planet channel in Europe, Asia and Latin America and the Liv network in Latin America.

At home in Britain, the BBC has come under pressure from commercial rivals and some politicians over the breadth of its ambitions in areas ranging from magazine publishing to the Internet. The BBC Trust, which oversees the broadcaster, last year urged the BBC to focus on developing channels that bear the broadcaster’s own brand name, like BBC America.

John Smith, chief executive of BBC Worldwide, said the talks with Discovery on the sale of the stake predated the BBC Trust report, but said the proceeds would be spent on marketing and distribution of its own branded channels, as well as programming for them.

The BBC and Discovery extended one part of their partnership, under which Discovery invests in BBC science and nature programs like “Life” and “Planet Earth,” and acquires the U.S. rights to them. The BBC previously sold its 20 percent stake in the U.S. Animal Planet channel to Discovery.

For Discovery, full ownership of Animal Planet and Liv will provide greater latitude to revamp their programming, said Mark Hollinger, chief executive of Discovery Networks International. Discovery has been trying to broaden the audience for channels like Liv, previously known as People+Arts, by adding more entertainment shows.

“The BBC has been a great partner, but when you own something 100 percent you can do things that you can’t if you are in a partnership,” he said.

Discovery has struggled to develop “flagship” networks that could help generate more lucrative advertising and distribution deals internationally, Mr. Hollinger said. In an effort to build audiences, Discovery introduced its TLC channel, which is popular with women in the United States, in dozens of other countries this year.

Following the review by the BBC Trust, BBC Worldwide is also moving to sell a stake in its magazine business, as well as its 50 percent share in UKTV, a group of British channels that are available on cable, satellite and other digital TV systems. BBC Worldwide’s commercial activities contributed £73.6 million, or $118.6 million, to the BBC’s budget in its latest financial year.

Mr. Hollinger is one of several candidates to buy the stake in UKTV, which the BBC jointly owns with Virgin Media, the biggest British cable company.

“We are looking at that portfolio; it’s a great portfolio,” he said. “It’s hard to know how it will turn out.”