Discovery & BBC Studios Deal To Carve Up ‘Flack’ Broadcaster UKTV Receives Approval From Regulator Ofcom

The multi-million-dollar deal between Discovery and the BBC to carve up multi-channel broadcaster UKTV has received regulatory approval in the UK.

In April, the two companies finally came to an agreement on the future of the Flack broadcaster with Discovery taking control of three channels and BBC Studios acquiring the other seven channels.

Discovery became a co-owner of the broadcaster, which operates ten channel brands, when it bought Scripps last year. It has taken control of lifestyle channels Good Food, Home and Really with Discovery’s UK chief James Gibbons overseeing the channels.

BBC Studios acquired W, Alibi, Dave, Drama, Eden, Gold and Yesterday as well as digital service UKTV Play. These channels are most closely connected to BBC content. Marcus Arthur, President, UK, Ireland & ANZ, BBC Studios Distribution will become CEO of UKTV following the completion of the deal.

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Regulator Ofcom assessed the deal, as required under the BBC’s charter, and found no “potential market distortion”. It noted that while the deal was a “significant change given the scale of the transaction” but decided not to conduct a further formal competition assessment of the deal.

It noted, “We considered potential competition issues, including if Public Service content was supplied directly to UKTV below market rates, and the risk of UKTV profits being used to subsidise other commercial activities that are not earning a commercial rate of return over an appropriate period. However, we are confident that our trading and separation regulation sufficiently safeguards against any potential market distortion or unfair competitive advantage arising as a result of the UKTV deal.”

As part of the agreement, BBC Studios will pay £173M to Discovery for the majority of UKTV channels, which includes a balancing payment in relation to the channels acquisition and the assumption of £70m of debt, currently financed by Discovery. This will be financed through existing borrowing facilities. Discovery will also receive at least an additional £10m from UKTV, as the parties will share the existing cash on the company’s balance sheet, reflecting outstanding dividend, and other ancillary value transfers to Discovery through the transaction. BBC Studios and Discovery have also agreed to a short-term programming team for the supply of BBC Studios lifestyle content to Discovery’s UKTV channels in the UK.

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