AMC to buy most of Liberty Global's int'l content unit


* Deal for 750 mln euros ($1.04 bln)

* AMC to distribute programming through Chellomedia networks

* Liberty Global says deal helps to simplify its businesses

* AMC shares fall 3 pct; Liberty up 1 pct

By Soham Chatterjee

Oct 28 (Reuters) - AMC Networks Inc said it wouldbuy Chellomedia, the international content unit of John Malone'sLiberty Global Plc, for about $1.04 billion, giving itgreater control over the global distribution of its programs.

Liberty Global, the largest cable operator in Europe, saidthe deal would help it simplify its business and allow it tofocus on its core market, the United States.

AMC Networks, home to hit shows such as "Mad Men", "BreakingBad" and "The Walking Dead", has been spending money to developcontent and expand programming as it takes on HBO, Time WarnerInc's premium cable TV network.

"It seems like a good deal for AMC. They are basically goingfrom 96 million affiliate subscribers to 500 million affiliatesubscribers globally," Albert Fried & Co analyst Rich Tullo toldReuters.

Chellomedia's network, consisting of 68 channels, isdistributed to 390 million households in 138 countries. Most ofits programming comprises movies and entertainment and contentacquired from partners.

AMC Networks said the businesses being bought include ChelloCentral Europe, Chello Latin America and Chello Zone.

The network will also acquire Chellomedia's stakes in jointventures with CBS International, A+E Networks, Zon Optimus andother partners.

Tullo said the deal allows AMC to expand into high-growtheastern European markets, which have good intellectual propertyprotection, and get access to Chellomedia's production assets.

"Chellomedia is an ideal platform ... it provides one, ifnot the largest, international channel groups not owned by alarge content company," AMC Networks Chief Executive Josh Sapansaid on a conference call on Monday.


Shares of AMC Networks were down 2 percent in afternoontrading as analysts raised concerns that the deal would make itharder for a larger media company to buy AMC, which was spun outof the Dolan family controlled Cablevision Systems Corp in 2011.

AMC Networks, whose channels also includes Sundance and IFC, has been speculated to be an acquisition target of cablenetwork companies such as Comcast Corp, News Corp and CBS Corp.

"Given AMC's earnings outperformance over the past fewyears, we saw a notable opportunity to return capital toshareholders ... ahead of a sale of the company," BTIG analystRichard Greenfield said.

"However, it now appears that AMC is decisively in growthmode, even before the next leg of original programming hasproved itself."

While marquee shows like "Breaking Bad" and "Mad Men" haveended or are on their way out, AMC has been trying to replacethem with new shows such as "Low Winter Sun", "Turn" and "Halt &Catch Fire".


Malone, known as the "King of Cable", jumped back into theU.S. cable market earlier this year by buying a 28 percent stakein Charter Communications. Until then, he had been on adecade-long acquisition spree in Europe.

"In our view, the (Chellomedia) disposal improves Liberty'sliquidity to potentially help fund acquisitions," J.P. MorganCazenove analyst Carl Murdock-Smith said in a research note.

Liberty Global said it would retain Dutch premium channelsFilm1 and Sport1.

The company recently failed in its bid to buy out Dutchcable firm Ziggo, which rejected the offer as inadequate.

Liberty was also outmaneuvered by Vodafone Group Plc in competing bids for German operator Kabel Deutschland.

Liberty shares were up 1 percent.

Morgan Stanley advised Liberty Global on the deal, which isexpected to close in the first quarter of 2014. GuggenheimSecurities was the adviser for AMC.

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