TORONTO – Score Media will be a digital/new media company only going forward as the company has decided to sell its television business to Rogers Communications for $167 million. The two companies announced the deal early Saturday morning.
Score Media’s television business is comprised of theScore Television Network, closed captioning service provider Voice2Visual, and theScore Fighting Series (SFS). Score Media’s digital business includes theScore.com and its mobile applications ScoreMobile, ScoreMobileFC and Sportstap. John Levy, founder, chairman and CEO of Score Media will lead the digital media business following the spin-out.
Score Media’s digital properties are well-known and well received by sports fans inside Canada and beyond. Its tablet and smart phone apps are regularly among the top downloaded sports apps in the world. That popularity hasn’t yet translated into big revenues, but the company is hopeful those views and likes will translate into profits down the road.
“Rogers Media is on a growth trajectory and this builds on our momentum of delivering world-class sports content anywhere, anytime, on any platform,” said Keith Pelley, president of Rogers Media, in a press release. “TheScore 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.”
Canada's third largest specialty sports channel, theScore has about 6.6 million television subscribers generating approximately $45 million of annual subscription and advertising revenues, and $15 million of annual earnings before interest, taxes, depreciation and amortization (EBITDA).
According to CRTC filings, theScore earns an average of about 17.7-cents per television subscriber per month. That’s likely to climb significantly under the Rogers Media ownership, given the sports properties that the channel (to be rebranded under the Sportsnet umbrella) will soon have access to – to go along with the new leverage of a far larger sports media ownership group.
Under the terms of the agreement, Rogers Media will acquire all of the issued and outstanding shares of Score Media and a 10% equity interest in Score Digital for total cash consideration of $167 million, reads Score Media’s press release. The total consideration includes the per share cash consideration of $1.62, funds to repay Score Media’s outstanding credit facility ($13.1 million of which had been drawn down at the end of the last quarter, ended May 31, according to the company’s report to shareholders), up to $12 million to initially capitalize Score Digital, and funds to pay certain advisory, professional and other expenses related to the transaction.
All that would seem to bring the value of the deal closer to $200 million.
In addition, as part of the transaction, Score Digital and Rogers Media will enter into a software development and licensing arrangement under which Rogers Media will have access to Score Digital’s mobile technology to immediately enhance its mobile sports offerings, adds the release.
“I am extremely proud of our team at theScore Television Network and the unique original content we produce each and every day,” said Levy in the release. “As part of Rogers Media’s inventory of sports properties, its extensive programming assets and senior management’s commitment to securing premium sports content, I am confident the network will continue to grow and contribute to the Canadian sports scene.”
“This deal allows us to continue to pursue our vision and strategy that has formed a huge part of what we’ve been doing at Score Media for some time. We can now focus 100% on our digital products, building on the tremendous strides we have made in growing the international audience of our web site and mobile apps.”
The implementation of the plan of arrangement will be subject to approval by two thirds of the votes cast at a special meeting of Score Media shareholders which is expected to take place in October 2012. The transaction is also subject to applicable regulatory approvals and the satisfaction of certain closing conditions customary in transactions of this nature, including the approval of the Ontario Superior Court of Justice, the release outlines. Of course, it also requires approval of the CRTC.
The transaction will be carried out by way of plan of arrangement, and will be subject to Score Media shareholder and court approvals, and the satisfaction of other customary conditions, adds the Rogers release. CEO Levy has entered into an irrevocable lockup agreement with Rogers Media in support of the transaction. Upon completion of the arrangement, the shares of Score Media will be held in a CRTC-approved trust and release of the shares to Rogers Media will be subject to receipt of CRTC final approval.
– Greg O'Brien
