Discovery moves into sport with a 20% stake in Eurosport

US factual broadcaster has the option of taking a controlling stake in the European company in two years

US factual broadcaster Discovery is moving into sports programming, paying $170m (£134m) for a 20% stake in Eurosport, with an option to take a controlling stake in the European company in two years.

Discovery’s deal to take a stake in Eurosport group, parent of Eurosport International and Eurosport France, values the business at €850m (£690m). Discovery owns channels including Discovery, TLC, Animal Planet and the Oprah Winfrey Network.

As part of the deal Discovery has the option to increase its stake to 51% in two years. If the company does TF1, the parent of Eurosport, has the ability to then exercise a put option over the remaining 49% to that would see Discovery take full control.

Discovery has also taken a 20% interest in four TF1-owned French pay-TV channels – TV Breizh, Histoire, Ushuaia TV and Stylia – for €14m, valuing them at a total of €70m.

Discovery has the option of increasing that shareholding to 49% in each channel in two years. The deal is expected to be concluded in the next few weeks.

The two companies said the deal aims to “enhance the output” of the French documentary, magazine and current affairs channels to make a better offer for pay-TV distributors.

Discovery and TF1’s production arm will also work together on making programmes.

Analysts at Credit Suisse did not publish a view on the merits of the deal for Discovery, but said that for TF1 the market still looks tough.

“We believe that while these agreements will be seen as good news now, in fact the outlook for TF1’s core channels is so weak that any strength in the stock we may see in the short term is unlikely to be sustained,” said Credit Suisse.

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