Market Watch

Turner to Acquire Scandinavian Channel Group MMG

August 17, 2010

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International channel group and Time Warner subsidiary Turner Broadcasting is to acquire a 100 per cent stake in pan-Scandinavian channel group MMG for an undisclosed amount. The pay-TV group, whose channels include CNN, Cartoon Network and Turner Classic Movies, will add owned or distributed channel properties including Star!, Showtime, TV7, Silver and Silver HD to its portfolio. Deal also covers MMG's non-channel business segments, including film distribution wing NonStop Entertainment; distribution elements of NonStop Television (NonStop distributes third party channels Luxe HD, Voom HD and Mezzo) and subtitling business PrimeText International. Deal is subject to regulatory approval.

MMG provides an attractive target for Turner Broadcasting. Company channels include Silver, an independent film and world cinema channel which will complement Turner's TCM, movie channel Showtime (licensee of the Showtime brand), Swedish general commercial channel TV7 and entertainment channel Star!.

MMG has pursued a rapid expansion strategy into new and emerging markets in recent periods, having launched its channels into several territories including the Benelux markets and Baltic states. Strategy complements Turner's own aims of improving its channel distribution in emerging markets. Although Turner has distribution deals for all of its key channels in the territories that MMG currently reaches, the additional properties the acquisition will bring to the negotiating table may improve Turner's chances of enhancing the positioning of its channels within Scandinavian and Eastern European pay-TV bouquets.

Turner will also see business expansion options in improving the distribution and attractiveness of MMG's channels. Silver and Silver HD currently reach the Nordic territories only; however Turner channels enjoy distribution on all major European pay-TV platforms. Expansion of Silver's reach to these platforms is a significant potential opportunity for Turner. In addition to improving reach, Turner may also choose to supply content to the MMG channels in order to improve their profile in their existing markets. MMG has adopted this strategy historically, supplying content to TV7 from its other channels, following its acquisition of TV7 in 2008. Turner's existing movie, kids show and news content present a prime opening for the company to improve content profiles on channels such as TV7 or Star!.

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