Channel 4 buys 50% stake in Emap’s music TV division

BY A CORRESPONDENT

26 July, 2007:

Broadcasting giant Channel 4 is continuing to expand. It has entered into a £28-million deal to buy 50% stake in Box TV, Emap’s music television division, which includes the stations Kerrang! and The Hits.

The deal with Emap follows a successful bid by Channel 4 to win the rights to enter the radio market. Earlier in July 2007, Channel 4 had won the rights to compete head-on with BBC in the digital radio market.

Channel 4 is set to launch a number of channels in 2008. According to the joint-venture partners, their target is to create the number one music television company in the United Kingdom.

The deal will bring together Emap’s stations, which are based on the company’s radio stations – including Kerrang!, Kiss and Q as well as Britain’s most popular music television channel The Hits – with Channel 4’s extensive coverage of festivals such as the Isle of Wight and V Festival and its youth-oriented T4 content.

Andy Duncan, chief executive of Channel 4, said “this is a strategic investment for Channel 4 designed to generate significant revenues that can be reinvested in supporting our public service activity longer term. Music is an important part of Channel 4’s strategy for future growth.”

Emap and Channel 4 are, according to Paul Keenan, head of Emap’s consumer media division, “like-minded partners and together we make a formidable force in an otherwise fragmenting and challenging market.”

The two companies have said that opportunities to exploit new digital services like video-on-demand would be explored.

For Emap, the deal represents the third significant disposal over the past few months as the company is reorganising its business to take advantage of online advertising.

Emap, publisher of FHM and Closer, has raised £220 million through the sale of its French business-to-business publishing division and its Irish radio assets, as well as the deal with Channel 4. Emap bought The Box in 1996 for £6 million.

In 2006, The Box achieved sales worth £27 million and an operating profit of about £7 million across its seven digital channels. Emap could earn £4 million on the sale of its half share in Box TV, depending on how Box TV performs over the next three years.

Emap owns consumer-oriented business such as the Magic radio station and magazines including Heat as well as a strong business-to-business publishing and conference business.