SBS Broadcasting SA And United Pan-Europe Communications Expand Their Strategic Partnership
SBS Broadcasting SA (NASDAQ: SBTV; Amsterdam Stock Exchange (AEX): SBS) and United Pan-Europe Communications N.V. (NASDAQ: UPCOY; AEX: UPC) announced today an expansion of their strategic partnership. UPC has agreed to purchase 3 million Common Shares of SBS for cash at $54.125 (€54.18) per share in a private placement transaction thereby increasing its ownership to six million shares, representing 18% of SBS on a fully diluted basis. SBS and UPC also intend to form two new joint ventures: one to create four separate subscription television channels; and a second to develop entertainment portals and content for European Internet users. In addition, UPC intends to join SBS and the European Bank for Reconstruction and Development (EBRD) as a major investor in European Broadcasting System SA (EBS), an SBS-affiliated company that has been formed for the purpose of making broadcasting investments in Central and Eastern Europe.
The four new subscription channels will be jointly owned and operated by SBS and UPC. The channels are initially being developed for the Benelux region with the intention that they will be rolled out to other cable operators across Europe and to UPC systems in other countries. Additionally, UPC, SBS and ZeniMax Media Inc., SBS' U.S.-based Internet technology and content partner, intend to develop jointly a number of European entertainment portals and related web sites. The portals will enable European Internet users to access a wide variety of original entertainment content created by ZeniMax, including animated characters and series, computer graphic novels and stories, digital magazines, online games and sophisticated e-commerce features, as well as non-proprietary programming obtained from third parties. The portals will be made available through Chello Broadband, UPC's highspeed broadband Internet service provider, and other Internet service providers and certain content will be specifically designed or versioned to take advantage of Chello's highspeed broadband capabilities.
Commenting on these developments, Harry Evans Sloan, Chairman and Chief Executive Officer of SBS, said: "I am pleased that UPC has chosen to increase substantially its stake in SBS by acquiring additional shares at current market levels. This $162 million (€162.5 million) investment represents a strong vote of confidence in our Company's business, prospects, strategies and management by an experienced and knowledgeable industry player and further strengthens our current capital base."
"By expanding our relationship with UPC, we are taking a major step in our previously announced strategy of carving out a meaningful position for SBS in additional multiple revenue streams and new media. The joint venture to develop new subscription channels represents a powerful marriage of SBS' programming skills with UPC's substantial and growing pan-European distribution footprint. The decision to jointly develop entertainment portals will combine SBS' experience in broadcasting and ZeniMax's Internet technology and creative expertise with UPC's broadband network and subscriber base. We will maximize the strength of these various businesses by adding interactivity to the television viewing experience, cross-promoting the platforms and migrating audiences between traditional media and new media.
"UPC's intention to invest in EBS, SBS' existing joint venture with the EBRD, will substantially increase EBS' firepower and strengthen our presence in the rapidly growing markets of Central and Eastern Europe. UPC is very well-positioned in Hungary and Poland, two of the most important of these markets, and is a respected operator throughout the region. SBS owns and operates TV2, Hungary's leading television station."
Commenting for UPC, Mark Schneider, Chairman and Chief Executive, said: "We have been delighted with our original investment in SBS. This additional investment underscores our confidence in the operational excellence and strategic vision of the SBS management. Our intention to expand our strategic relationship to include new subscription channels and Internet portals reflects our continuing belief that combining SBS' extensive experience in programming and content development with UPC's broad distribution platform will allow us to provide a range of compelling new products and services for customers across our complimentary and overlapping geographic footprints."
SBS is a European commercial television and radio broadcasting company with operations in Western and Central Europe. Countries where SBS currently broadcasts include: Sweden, Norway, Denmark, Belgium, The Netherlands, Hungary, Switzerland, Finland, and Slovenia. SBS is also an emerging presence in all aspects of European new media. SBS holds ownership interests in a variety of e-commerce activities. A joint venture between SBS and Endemol, Holland's leading production company, is developing Holland's first entertainment portal and through vt4.net, SBS is the leading provider of Internet access services in Belgium. SBS' radio station KISS-FM has the most heavily trafficked Internet site in Finland.
Headquartered in Amsterdam, UPC is one of the most innovative broadband communications companies in Europe and owns and operates the largest pan-European group of broadband communication networks. UPC provides cable, television, telephony, high-speed Internet access and programming services in 12 countries across Europe and in Israel. As of December 31, 1999, UPC's systems passed approximately 9.2 million homes with more than 6.0 million basic cable subscribers. In addition, UPC systems had 207,200 residential telephony lines and 22,400 business telephony lines as well as 117,400 residential Internet subscribers and 3,700 business Internet subscribers. UPC is a consolidated subsidiary of Denver-based UnitedGlobalCom Inc. (NASDAQ: UCOMA). Microsoft Corporation has an interest of approximately 7% in UPC.