A CanWest Global Communications Corp. unit snapped up the library of a European film and television production company for more than $100-million (U.S.) yesterday, the biggest content deal in the history of the Winnipeg broadcasting giant.
CanWest Entertainment Inc. of Toronto has acquired the international distribution arm of Endemol Entertainment Holding NV of the Netherlands. The deal grants CanWest rights to about 600 hours of television programming, including television series Big Brother and mini-series Joan of Arc and The Audrey Hepburn Story. The company will assume control of Endemol's contracts for future programming and content.
More important, the deal is a unique manoeuvre around producer and broadcaster Alliance Atlantis Communications Inc. Through the Endemol deal, CanWest will control distribution rights to some of its Toronto rival's best-known series, including television series Beastmaster, Cold Squad and Psi Factor.
However, Peter Sussman, president of Alliance Atlantis's entertainment division, said the CanWest purchase will have little impact on his company. Endemol controls "a small amount" of Alliance Atlantis programming, he said. "Our catalogue is 15,000 hours."
The company's initial distribution deal with Endemol was struck to end programming "cannibalization" that complicated marketing efforts following the merger of Alliance Communications Corp. and Atlantis Communications Inc. in 1998, Mr. Sussman said.
"For us, this is a huge transaction," said Jay Firestone, president and chief executive officer of CanWest Entertainment of Toronto. "It basically doubles our size internationally."
The agreement will form a blueprint for future transactions aimed at securing quality programming, he said.
"Content is king," Mr. Firestone said. "Libraries are tough things to buy because everybody wants them. In the long term, it's a sustainable business because production depends on finding an idea and making it. Distribution depends on knowing the person who found the idea and made it."
The agreement ends CanWest's long search for a major programming deal. In May, 1998, the company spent $64.7-million (Canadian) to acquire Toronto producer Fireworks Entertainment Inc. The Fireworks team was folded into CanWest Entertainment and has spent much of the past year searching for acquisitions, including an unsuccessful courtship of U.S. television producer Rysher Entertainment.
The distribution deal follows the March acquisition of Endemol by Spain's Telefonica SA for $5.34-billion (U.S.). The telecommunications company acquired the Dutch production company for its European Internet and programming assets.
Analysts gave the Endemol acquisition tentative approval yesterday. "This is a low-financial-risk deal," one Toronto analyst said. But long-term success ultimately hinges on the shelf life of Endemol's library, the analyst said.
The content agreement comes at a critical time for CanWest. Earlier this month, the Canadian Radio-television and Telecommunications Commission approved the company's acquisition of eight television stations in Ontario, British Columbia and Alberta. The green light from the federal regulator effectively creates Canada's third television network, allowing CanWest to compete coast-to-coast with CTV Inc. and Canadian Broadcasting Corp.