Score Media Inc., a television network which has found worldwide success with its popular but largely unprofitable mobile applications, is in final negotiations to be purchased by Rogers Communications Inc. in a deal that would further accelerate the consolidation of Canadian broadcasting.
The Toronto-based sports network has been on the block for almost a year, as it struggled to outbid its larger rivals for increasingly expensive top-tier live events. The company’s stock was halted halfway through the trading day Friday “pending news,” after increasing by 46 per cent on rumours that a deal was imminent.
Details of the deal were still being worked on late into the evening, but sources on both sides said any remaining issues were largely formalities.
When the Score was founded in 1994, it provided text-only sports scores on its television station. It now earns most of its revenue from a television channel that specializes in offbeat commentary and relies largely on second-tier sports such as college basketball and professional wrestling for its live events.
While it carved out a niche by providing a slew of bloggers with cheeky commentary and hiring scrappy on-air talent, it found itself increasingly marginalized as the country’s biggest broadcasters, such as Rogers Media and Bell Media, continued to expand and bid up the cost of live events.
News of the deal comes the same week as Rogers and Bell closed the deal that will see them become joint owners of Maple Leaf Sports and Entertainment, which means the three largest English sports broadcasters in the country – Bell’s TSN , Rogers’ Sportsnet and The Score – would be held by the two companies.
Chief executive officer and founder John Levy – who owns 30 per cent of The Score’s outstanding shares – had been seeking a price of about $200-million for the better part of a year, but it’s believed the deal will value the network closer to $160-million.
“The network’s been in play since the day we launched, if you know what I mean,” Mr. Levy told The Globe and Mail in September when rumors of a possible sale first surfaced.
Neither Rogers nor Score executives would discuss the deal.
In the Score, Rogers would be getting a channel that is pumped into almost 7-million Canadian homes thanks to its licence, which guarantees it is included in most cable and satellite packages offered across the country.
But while its television station and its stable of outspoken hosts may be the Score’s most visible assets, the company has aggressively pursued the online data market via mobile apps built specifically for sports fans. The apps draw more than 3 million unique visitors a month, and consistently rank among the world’s most popular for both BlackBerry and iPhone.
It just signed a deal that would help further monetize its digital offerings, announcing a partnership with a U.K.-based betting house that would allow anyone using the ScoreMobile FC to place bets on live football matches with the push of a button.
But the popular service hasn’t translated into profitability for the company’s digital division – it spent $2.9-million developing apps and honing its technological offerings in the last quarter, but the products it has developed only brought in $1.1-million in revenue.
The company reported a $1.5-million loss in the last quarter. Broadcast revenue fell 6.5 per cent to $11.5-million in the quarter, while digital revenue increased by 27 per cent to $1.1-million.
The deal comes as BCE Inc. is in the midst of a $3-billion takeover of Astral, which has thrust the issue of media concentration into the spotlight.
That deal will be scrutinized by the country’s broadcast regulator next month, as rivals line up to protest that the Canadian broadcast industry has grown too concentrated as Rogers and Bell buy up all of the independent producers of content.
Rogers, which has filed an intervention opposing the Astral deal, said media consolidation is good for the Canadian broadcast industry because “significant benefits accrue to Canadian consumers as a result of having larger and financially stable broadcasting companies operating.”
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