ITV answered its City critics by snapping up a controlling stake in American production outfit High Noon Entertainment as the broadcaster continues to reduce its reliance on advertising revenues.
Scotland on Sunday, The Scotman’s sister paper, revealed that analysts had highlighted the need for ITV to “splash the cash” by buying other production companies and investing in its own programmes.
The channel three operator said it had taken a 60 per cent stake in High Noon, which makes entertainment and “reality” shows including Guinness World Records Gone Wild, Hurricane Hunters and The Great Baker for television networks in the United States.
ITV will pay $25.65 million (£16.7m) up front for its stake and has the option to buy the remaining shares in the company in four or six years’ time. A top up payment may be made in 2015 depending on the producer’s performance.
High Noon made an operating profit of $5.7m in 2012 and generated around 80 per cent of its production revenue from returning series.
The company – which was founded in 1997 by chief executive Jim Berger, chief operating officer Duke Hartman and chief administrative officer Sonny Hutchinson – makes programmes for 18 cable television networks, including Animal Planet, Discovery, Food Network, TLC and VH1.
Thomas Dey, chief executive at About Corporate Finance (ACF), which advised High Noon, said: “This deal sees ITV gain access to a state-of-the-art post-production facility in Denver, whilst High Noon becomes part of a renowned international group gaining access to new markets and resources.”
ACF – which advised on the sale of Jeremy Clarkson’s and Andy Wilman’s stakes in Top Gear to BBC Worldwide – was also involved in ITV’s £18m purchase last month of The Garden and the deal in December through which ITV took a 61.5 per cent stake in Gurney Productions for $40m.
The Garden has made documentary series including 24 Hours In A&E, Inside Claridge’s and The Merits of Ferrets, while Gurney is best known for its American Guns series.
The Discovery Channel had said American Guns would not be renewed for a further series, but denied that the decision was related to the massacre of 20 children and six adults in Newton, Connecticut.
ITV reiterated the decision after buying its stake in Gurney, which also makes Duck Dynasty, a programme about a family who make duck-calling whistles that has become a cable television sensation in the US. About 6.5 million viewers tuned in for the final episode of the programme’s second series, setting a record for cable network A&E.
ITV – which will deliver a first-quarter trading update at tomorrow’s annual general meeting – kicked off its latest round of acquisitions in August by buying So Productions So Productions from presenter Graham Norton for £17m.
STV, the Glasgow-based broadcaster, has also been diversifying away from its reliance on advertising revenues, by making programmes including the revival of Catchphrase and Celebrity Antiques Road Trip.