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Rogers to buy Score Media for $167M
Rogers to buy Score Media for $167M - thestar.com
Rogers Communications has struck an agreement to buy sports broadcaster Score Media Inc. in a transaction valued at $167 million, or $1.62 per share.
The purchase price includes assumption of Score Media debt and an investment of $12 million in Score Digital.
The announced purchased price is less than the $200 million Score CEO John Levy was reportedly seeking last year, but still more than double the firm’s market capitalization before news of a potential deal was first reported earlier this week in the Star.
Shares of Score Media (TSX: SCR) jumped nearly 47 per cent Friday following reports that the specialty TV sports broadcaster was in discussions to be purchased by Rogers (TSX: RCI.B).
Score Media, which owns the Score Television Network, rose 49 cents to $1.54 on the Toronto Stock Exchange before its stock was halted pending news just before noon Friday.
Score Media, which is based in Toronto, has been reportedly shopping around its assets for about a year, with some reports suggesting that chief executive John Levy was hoping to sell for $200 million.
Its market capital as of the trading halt was $126 million.
The Score runs third place among rival Canadian sports channels TSN and Rogers Sportsnet. Once the deal receives regulatory approvals, the television network would be rebranded under the Sportsnet umbrella
Rogers said in a statement Saturday that the acquisition of Score Media does not include its digital media business, including theScore.com website and mobile applications.
Immediately prior to the acquisition, Score Media's digital assets will be spun out to its existing shareholders, with Rogers Media retaining a 10 per cent equity interest in the digital media business. Rogers Media will also have access to Score Media's digital technology to immediately enhance its mobile offerings.
The sports network is well-known among sports fans for its mobile apps, which offer real-time scores and statistics. The company has credited its fast-growing mobile platform for much of the revenue growth it has seen in the past year.
Those prospects could be especially appealing to a company like Rogers, which owns a slate of television and radio stations, as well as a wireless division for smartphones, the devices that most commonly use apps.
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The deal gives Rogers a popular mobile app to rival CTV's TSN app, said Ken Wong, a marketing professor at Queen's University.
“From Rogers perspective this is making certain I think that that can offer advertisers an equivalent product to CTV's,” he said.
“And it means that Rogers now has a mobile application in this space, which they didn't have before, and that gives them one more product to sell to advertisers and it gives them the capacity to offer integrated bundles of media that it maybe didn't have before.”
Wong said in order to drive more revenue from data usage on its smartphones, Rogers will want to expand Score's capabilities, not just post scores, but add more editorial content, Rogers Sportsnet personalities, highlights of games or sportscasts.
“That would generate big data, because of course the moment you start showing video the data stream becomes quite substantial.”
Rogers has repeatedly said its strategy is to make as much content as possible available to viewers on screens of all sizes.
“Rogers Media is on a growth trajectory and this builds on our momentum of delivering world-class sports content anywhere, any time, on any platform,” Keith Pelley, president of Rogers Media, said in a statement.
“The Score is a tremendous sports service that offers a distinct flavour of premium, niche programming that fits squarely within our strategy of delivering highly sought-after content to Canadians.”
Rogers says Score Media shareholders will vote on the agreement in October, and that it would require two-thirds approval.
Last week, Rogers and rival BCE Inc. (TSX: BCE) completed their $1.07-billion acquisition of Maple Leaf Sports and Entertainment and its sports television channels.
At Score Media's annual meeting in January, Levy said he was optimistic about the future of the company's mobile apps.
“Our new businesses in the next three to five years we estimate to exceed revenue generated by television,'' he said at the time.
“The interesting thing about this growth is that 60 per cent of all this growth is coming from outside Canada, where no one's ever really heard of the Score TV network.”
Last year, the company acquired 20 per cent of NuLayer, the developer of its iPhone and iPad apps, in part of an effort to grow its mobile business.
Personally I don't see this as a good thing. Already I see no Serie A games on the Score.