Liberty Global, the ultimate parent company of cable television operators NTL and Chorus, is set to pay about €2 million for a 35 per cent stake in City Channel, a Dublin-based television station controlled by David Harvey.
It is understood that the Colorado-based company has also agreed an earn-out with Mr Harvey and other investors in City Channel that could net them another €2 million by the end of 2009 if certain profit targets are met.
This would place a value of more than €8 million on the business. Liberty Global, which is quoted on Nasdaq and has a market value of $7.4 billion, will have the option to buy the remainder of the company at market value at the end of 2009.
The deal is subject to approval from both the Competition Authority and the Broadcasting Commission of Ireland.
City Channel was launched in 2005 to provide local programming for the Dublin area. It has since started services for Galway and Waterford and is available only on NTL digital.
The station has differentiated itself from other Irish television channels by broadcasting programmes targeted at gay people and ethnic communities.
Liberty Global and Mr Harvey plan to expand the business into eastern Europe, starting with Hungary.
Shane O'Neill, Liberty Global's Irish-born chief strategy officer, said it would launch a service in October in Budapest, where its cable television subsidiary has about 300,000 subscribers.
The station plans to launch services in Cork and Limerick later this year, which will be available to Chorus subscribers.
It will also consider launching services into Bratislava, Prague and Warsaw, where Liberty Global also has cable operations.
"We want to invest in content that's unique and not carried on Sky," Mr O'Neill said. "We think that City Channel can be replicated in other markets across Europe."
Mr Harvey said City Channel made a loss of about €350,000 last year but had made a strong start to this year. "We've had a very strong first six months and we're at break-even or a little better, which is a reasonable achievement," he said.
The former RTÉ broadcaster currently owns nearly 70 per cent of the business, with 15 other investors holding small stakes in the company. Mr Harvey said he would continue to own more than 50 per cent of City Channel but some of the other investors will sell their stakes.
The investment will be held by Chellomedia, an offshoot of Liberty Global that manages its content investments. It owns NTL and Chorus through its UPC subsidiary, which controls its cable operations.
