BBC Studios to take UKTV’s entertainment channels

Discovery (DISCA) is on track to receive about $240 million from a transaction with BBC. Early this month, Discovery announced a plan to transfer some UKTV channels to BBC Studios, the commercial arm of BBC. UKTV is a commercial broadcaster co-owned by Discovery and BBC. It reaches around 40 million viewers every month.

According to the deal that Discovery has reached with BBC, the two will split up UKTV’s channels. Discovery will take UKTV’s lifestyle channels, while BBC Studios will take seven UKTV entertainment channels.

Discovery to Collect $240 Million from Sale of UKTV Channels

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BBC Studios will make a payment of 173 million pounds ($226 million) to Discovery for UKTV’s entertainment channels. In addition, UKTV will release at least 10 million pounds ($13 million) to Discovery from its existing cash reserve. Therefore, Discovery will receive more than $239 million in connection with the transaction involving UKTV with BBC Studios.

A boost to Discovery’s cash position

Discovery had $986 million in cash at the end of 2018. The payment from the UKTV deal should boost Discovery’s cash reserve, providing it with more financial flexibility as it continues to invest in growth.

Discovery’s revenue increased 51% YoY to $2.8 billion in the fourth quarter, which ended in December. Revenue rose 26% YoY for Comcast (CMCSA) and 6.0% YoY for Charter Communications (CHTR) in the fourth quarter. Altice USA (ATUS) recorded a revenue increase of 4.0% YoY, while Dish Network (DISH) reported a revenue decline of 6.0% YoY in the fourth quarter.

Discovery is planning to report its 2019 first-quarter results on May 2.

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