Stingray Digital Group Inc. is buying four specialty music television channels from Bell Media, with a plan to revamp them for distribution outside Canada while also appealing to the largest Canadian TV distributors.
The deal, announced Tuesday, will see Stingray acquire niche offerings in MuchLoud, MuchRetro and MuchVibe, as well as Juicebox, a music video channel aimed at kids. Bell Media, a division of BCE Inc., will keep ownership of the flagship Much network and its sister channel, M3.
Financial terms were not disclosed, and the deal is expected to close in the third quarter of 2016.
The Much brand is established among generations of Canadian viewers who came to know it under its former name, MuchMusic, but its fortunes have declined as viewing of music videos shifted online. Stingray, which used the former Galaxie music service as a platform to become a leading provider of packaged music channels, plans to rebrand and reprogram its new acquisitions with a view to exporting them south of the border.
"The major advantage is for us to export these channels with Comcast on the X1 platform," said Eric Boyko, Stingray's president and chief executive officer, referring to U.S.-based Comcast Corp.'s newest TV offering. In early May, Stingray expanded a distribution agreement with Comcast.
In a statement, Bell Media president Mary Ann Turcke said selling the channels "enables us to focus our resources," and that the deal "helps foster a more competitive broadcast environment and ultimately creates more choice for consumers by capitalizing on both companies' strengths."
The transaction may also prove strategic for both companies, thanks to a new regulatory requirement that has yet to take effect. Starting in September of 2018, Canada's vertically integrated communications giants, which have both media and distribution arms, will have to offer one independent channel for each of their own channels that they offer.
The sale of the four channels to Stingray reclassifies them as independent, which Mr. Boyko expects will attract interest from large TV distributors such as Bell, Rogers Communications Inc. and Quebec's Videotron Ltd., which will need to match independent channels with their own to meet the one-to-one ratio.
Stingray has been building its portfolio of TV music channels as part of an aggressive international expansion that helped the company more than double its profit for the fiscal year that just ended March 31 – its first as a public company – to $13.9-million.
Mr. Boyko told analysts last week that Stingray is looking ahead to "a healthy pipeline of acquisitions," and said in an interview that the company is exploring deals in the United States, Latin America, Europe and Asia.