Providence, 3i take Crown for $242m

Providence Equity Partners, 3i Group and UK television executive David Elstein have agreed to buy the international business of Crown Media, owner of Hallmark Channel.

Providence Equity Partners, 3i Group and British television executive David Elstein have agreed to buy the international business of Crown Media Holdings for $242 million (€183 million).

Under the terms of the agreement, the investor group will acquire international versions of Crown’s Hallmark Channel and rights to broadcast Crown’s movies and shows overseas. The deal also includes a broadcast facility in Denver.

Publicly traded Crown, a division of Hallmark cards, operates cable channels that have a library of 600 titles, including the Little House on the Prairie and Gilligan's Island television series. According to regulatory filings, the channels boosted their subscriber base by 12 percent in the fiscal quarter ended September 30, 2004, for a total of 60.7 million customers overseas and 63.4 million viewers in the US.  However, Crown has reported 19 consecutive quarters of losses.

UBS Securities reportedly is advising Crown. Debevoise & Plimpton is advising Providence.

Entertainment content providers are becoming attractive to buyout firms seeking a regular revenue stream through royalty-paying intellectual properties. The Crown transaction represents Providence’s second such foray in less than six months. Last September, Providence joined Texas Pacific Group and DLJ Merchant Banking Partners in backing Sony Corporation of America and agreed to acquire movie studio Metro-Goldwyn-Mayer in a $3 billion deal.

Also in September, Forstmann Little & Co., the New York buyout giant, agreed to acquire IMG, a sports and talent marketer, for a reported $750 million in cash. In a separate, similar deal, Boston private equity firms Thomas H. Lee Partners and Bain Capital reportedly agreed to buy a minority stake in the Firm, an entertainment, sports and lifestyle marketing firm. Thomas H. Lee is already a part owner of Warner Music Group, which was bought out of Time Warner.