After months of industry speculation that placed DHX Media in the running, the Halifax, Canada-based company’s US$160 million cash offer for Family Channel, Disney XD and Disney Junior has been accepted by owner Bell Media. Kidscreen talked to DHX president and COO Steven DeNure about what this means for the prodco.
The deal comes on the heels of DHX’s purchase of Ragdoll Worldwide and its popular Teletubbies and In the Night Garden brands in September for US$27.7 million.
Family, which launched in 1988 and has approximately 5.7 million subscribers, is currently the most-viewed children’s channel in Canada, with a close to 30% share of kid viewers two to 17, and DeNure says the acquisition of the channel will enhance the company’s ability to operate as a vertically integrated player in the kids content business.
“From a strategy point of view, we’ve worked hard to build up a kids media company with a library, a licensing arm in CPLG and brands that are meaningful, and so now we have the opportunity to take integration one step further with a broadcast platform,” DeNure says. In terms of next steps and plans, the deal’s close hinges on approval from government regulator the CRTC and the Competition Bureau. The approval process is expected to be concluded by spring 2014.
“For now, it’s business as usual as the channels will continue to operate independently. We spent weeks on the acquisition, so now we have time to figure out their integration into DHX overall. We don’t have a broadcasting platform, so it’s unique.”
Launched in 2007, Disney Junior (English) has approximately 4.9 million subscribers, representing a market share of 13.4% among its primary target audience of kids two to seven. Meanwhile, Disney Junior (French) was launched in 2010 and has approximately half a million subscribers. Launched in 2011, Disney XD has 4.5 million subscribers, representing a market share of 3.5% among its primary target audience of boys six to 12.
Over the 12-month period ended August 2013, Family, Disney XD and Disney Junior generated revenues of US$81 million. Over the past three years, revenue has increased at a compounded rate of roughly 7%. So the deal is expected to be accretive, increasing DHX’s overall revenues by more than 70%.
On news of the deal, DHX shares traded on the Toronto Stock Exchange shot up by roughly 26% and were trading at around US$4.96 apiece by mid-day. DHX is financing the deal through a combination of cash and an expanded credit facility.
The transaction is expected to close in 2014 pending approval by the Competition Bureau and the Canadian Radio-television and Telecommunications Commission (CRTC) and satisfaction of other customary closing conditions.
DHX Media is currently known for representing brands such as Yo Gabba Gabba!, Caillou, Inspector Gadget and Johnny Test and owns a library containing 9,500 half hours of programming.