Financial analysts have said the cost of Scripps Networks International’s deal for TVN could rise to US$2 billion if it moves for the outstanding shares in the Polish broadcast group.
Having bought 52.7% of TVN, SNI is required by Polish law to move for an additional 13% of its stock, and has the option to tender for more.
Including the assumption of US$882 million of TVN debt, the €584 million (US$615 million) deal for TVN will increase SNI’s debt load by about US$1.5 billion, according to Moody’s. The credit ratings agency has SNI on review for downgrade in the wake of the deal.
“While Moody’s recognises the strategic rationale of the transaction and with a significantly strong dollar, the timing of the acquisition makes sense, the adverse impact from the incremental debt will lead to a level of deterioration in SNI’s credit metrics,” it said.
Moody’s added that on current financial performance, Scripps does have the ability to pay down debt.
Scripps has been aggressively expanding internationally. As well as the TVN deal, it is reportedly looking to take full control of the UKTV digital channels group.
In the US, it is also expected to move this year for cabler Cox’s 35% stake in Travel Channel. It bought 65% of the cable net from Cox in late 2009.