TF1, Discovery Communications to continue alliance deal negotiations

French media group TF1 has given the go-ahead for negotiations to form a strategic alliance with Discovery Communications to continue and be completed. Discussions cover three main areas, with the further development and possible takeover of TF1’s Eurosport subsidiary a key element.

By forming a relationship between the pan-European sports broadcaster and Discovery’s channels, the aim is to “unlock synergies and complementary capabilities”, particularly in Europe. This would involve sports programming as well as entertainment and documentaries, with the two parties working on “geographical expansion, new product launches and digital rollout”, among other areas.

To achieve this Discovery would take a 20 percent minority shareholding in the Eurosport group, which comprises Eurosport International and Eurosport France. This transaction would involve a cash consideration of approximately €170 million ($221.6 million).

Under an option given by TF1 it is possible for Discovery to increase its interest in Eurosport to 51 percent in two years time. If that happens TF1 would be able to use a “put option” regarding the outstanding 49 percent, which could potentially raise Discovery’s holding to an all-out 100 percent.

The negotiations, led by TF1’s chief executive, Nonce Paolini, also include the development of pay TV services in France, focusing on documentary, magazine and current affairs programming; and production of magazine and documentary programming through TF1 Productions.