12.06.2010 02:35 PM
Encompass Digital Media to Acquire Ascent Distribution Division for $120 Million
LOS ANGELES: Encompass Digital Media
recently announced a definitive agreement to acquire the global content
distribution business of Ascent Media Corp. for total consideration of
approximately $120 million. The sum includes approximately $113 million in cash
and the assumption of certain indebtedness and obligations totaling approximately
$7 million. Encompass said the transaction would “greatly expand its scale and
geographic footprint.” Encompass--formerly Broadcast Facilities Inc.--has core
operations in Los Angeles and Atlanta; Ascent has broadcast facilities in New
York, Minnesota, Burbank, Calif., Singapore and London.
“The transaction enables Encompass to provide unparalleled disaster recovery,
occasional-use transmission and backhaul for news, sports and government
services,” the buyer said. “Encompass will also expand its Los Angeles digital media
manipulation, archive and distribution services to support existing and
emerging applications and platforms worldwide.”
Following the completion of the transaction, Encompass will have approximately
950 employees and will operate a network of broadcast facilities worldwide with
integrated media solutions that include: Network origination, centralcasting
for TV stations, disaster recovery, satellite and fiber transmissions, satellite
uplink trucks and digital media services.
The combined client base includes A&E, Lifetime, Sony, NBCU, CBS,
Disney/ABC, BBC Worldwide, U.S. Department of Defense, MTV, ESPN, NHL,
Discovery Networks, DirecTV Sports Networks, NFL Network, YES Network, Scripps,
Hallmark, Channel Five and TV Guide among others. The Ascent video switch
business also will allow Encompass to expand its relationships with CNN, CNBC,
Bloomberg, Thomson Reuters, and the United Nations.
Financing for the transaction is being provided by Macquarie Capital and
Tennenbaum Capital Partners LLC. Macquarie Capital is serving as the exclusive
financial advisor to the Encompass. Tennenbaum Capital is a current lender to
and shareholder of Encompass and will continue to participate in both
capacities. Munger, Tolles & Olson LLP served as primary legal advisor. The
transaction is subject to customary closing conditions, including approval by
Ascent shareholders, regulatory clearances, and the transfer of certain FCC
licenses. Subject to fulfillment of these conditions, the transaction is
expected to close in the first quarter of 2011.
Shares of Ascent (NASDAQ: ASCMA) rose as much as 12 percent the day the
transaction was announced, to more than $34 before settling today at around
Fool notes that Ascent will have close to $460 million of debt-free
cash on hand ofer the transaction.
-- Deborah D. McAdams