Emap in music TV joint venture with Channel 4

Emap plc, the B2B and consumer media group, announced a joint venture agreement with Channel 4 which aims to create the UK‘s number one music TV provider.

Under the terms of the agreement, Emap has agreed to sell 50% of Box Television Limited, which owns Emap’s music TV business, to Channel 4, for a cash consideration of GBP 28 mln, subject to a post completion working capital adjustment, in a deal which brings together two of the UK’s leading cross-platform entertainment providers. The agreement includes a price adjustment mechanism capped at GBP 4 mln dependent upon the JV’s performance over the next three years.

The Emap and Channel 4 JV will look to exploit new and emerging digital growth opportunities, including video-on-demand, in addition to traditional broadcast revenue streams. It will benefit from the combination of Emap’s TV brands and distribution and Channel 4’s premium music-based content and expertise in digital channel and platform management, and there will be increased cross-promotional opportunities spanning both media companies’ portfolios.

Since purchasing The Box in 1996 for GBP 6 mln, Emap has built up its music TV business through a series of successful launches. It now comprises seven digital music TV channels: The Hits, The Box, Smash Hits, Kerrang!, Q, Kiss and Magic, with The Hits being the UK‘s most-watched music TV channel.

In the year to 31 March 2007, Emap’s music TV business had revenue of GBP 27 mln and operating profit of GBP 7 mln. The business had gross assets of GBP 8 mln. It is intended that the proceeds from the transaction will be applied to reduce Group borrowings.

“This alliance between Emap and Channel 4 will enable us to increase our music brands’ presence on new and emerging platforms, including video-on-demand, opening up new opportunities outside of the traditional broadcast market for both audience and revenue growth,” said Paul Keenan, Chief Executive of Emap Consumer Media and Executive Director of Emap.

“Emap and Channel 4 are likeminded partners and together we make a formidable force in an otherwise fragmenting and challenging market,” he added.