Discovery, Liberty will ‘build on’ All3Media acquisition

Discovery and Liberty Global are expected to buy additional content companies and assets to build up producer and distributor All3Media.

DLG Acquisitions, a holding company created by Discovery and Liberty Global, has struck a deal to acquire All3Media that just needs regulatory approval.

Credit analysts Moody’s said it expects the acquiring companies to add to the All3 fold and that the resources are in place to do that.

“Over time Moody’s expects that the joint venture partners will build on the All3Media acquisition and add additional programming assets by way of acquisition or contribution of assets,” it noted. “The financing documents provide the company with significant flexibility to pursue this objective.”

Assessing All3Media’s business, Moody’s also noted its strong position in the UK and German TV markets, its diverse catalogue and its growing distribution business in All3Media International. It also touted the strong recent performance of the US division, which is run by Stephen Lambert.

However, in its report on All3 the credit analyst also referred to the company’s high level of debt-to-EBIDTA profit and noted All3’s and a “dependence on continued strong US growth to compensate for near-term softening in the company’s UK and German markets”.

London-based All3Media posted revenues of £511 million (US$858.5 million) for the year to end-August 2013. German prodco MME Moviement and its UK counterpart Lime Pictures, which is behind The Only Way is Essex (pictured), accounted for 30% of the total. About 20% of sales came from the All3’s international business.

Moody’s said that its expectation is “that free cash flow could well be used to fund add-on acquisitions.”