Digiturk has enterprise value of $1.5bn sources; Al Jazeera has hired Barclays to assist with bid: sources; Cukurova Holding owns 53% of Digiturk, Providence has 47%; formal sale process expected in early January: sources
Reuters
Dubai/Istanbul
Qatar-based broadcaster Al Jazeera is considering a bid for a majority stake in Turkish pay-TV company Digiturk to boost its soccer offering ahead of the 2022 World Cup finals in Qatar, banking sources familiar with the plans said yesterday.
A number of potential buyers have shown an interest in Digiturk since a 53% stake in the company was seized by Turkey’s Savings Deposit Insurance Fund (TMSF) from Cukurova Holding in May because of the conglomerate’s debts to the state agency.
Al Jazeera’s interest stems from Digiturk’s $321mn-a-year deal for exclusive rights to Turkey’s Super League championship, one of the sources said.
“It’s really the football rights that differentiates Digiturk from others, and the Qataris are keen to get that access,” the source said. “Otherwise, it does not make any sense for them to look at a business in a country where the local language is so dominant.”
Digiturk has a market capitalisation of $1bn and about $500mn of debt, two of the sources said, giving it an enterprise value of about $1.5bn.
Al Jazeera has appointed Barclays Capital to assist with its bid, the sources added.
TMSF declined to comment on a stake sale and an Al Jazeera spokesman was not available to comment.
US private equity group Providence Equity Partners owns the remaining 47% of Digiturk and has appointed JP Morgan to evaluate its options, the banking sources said. However, another source close to the US firm said it was not considering a sale.
Both Providence and JP Morgan declined to comment.
A formal bidding process is expected to begin in early 2014, the sources said.
Non-binding offers have already been submitted by Turkey’s Dogan Group and Turk Telekom. In September Dogan offered $742mn for a 53% stake, trumping Turk Telekom’s $530mn approach for the same stake in July.
“What we are seeing is that the local players are keen for the majority 53% stake, while the international bidders may want the whole business,” another banking source said.
Al Jazeera is looking to continue its international expansion. In January it agreed to buy Current TV, the struggling US cable channel founded by Al Gore and partners. Terms of the deal were not disclosed but analysts estimated that it could be worth as much as $500mn. Turkey’s pay-TV market had 4.1mn subscribers in the second quarter of 2012, producing revenues of $26.8mn, up 52% on the previous quarter, according to the latest available data from telecoms regulator BTK. Digiturk’s market share in the quarter was 61.73%, BTK said.