Encompass Adds Ascent Media’s Content Distribution Business to Portfolio

Encompass Digital Media has engineered a deal to acquire the global content distribution business of Ascent Media Corp. for a total of approximately $120 million, including approximately $113 million in cash and the assumption of debts and obligations totaling approximately $7 million.

According to Encompass, the transaction will greatly expand its scale and geographic footprint by combining Encompass’ core operations in Los Angeles and Atlanta with Ascent’s broadcast facilities in the U.S. (including the New York metro area, Minnesota, and Burbank), Singapore, and London.  In addition to providing international and U.S. clients with network origination and transmission services, the transaction will enable Encompass to provide disaster recovery, occasional-use transmission and backhaul for news, sports, and government services.  Encompass says it will also expand its Los Angeles digital media manipulation, archive, and distribution services.

“Acquiring Ascent’s content distribution business positions Encompass as a leading provider in outsourced media solutions by significantly enhancing our ability to meet the needs of broadcasters and media companies looking to benefit from the latest technology and rationalize costs with a highly credible global partner,” says Encompass CEO Simon Bax.

Following the completion of the transaction, Encompass will have approximately 950 employees and will operate a network of broadcast facilities worldwide with integrated media solutions that include: network origination, centralcasting for TV stations, disaster recovery, satellite and fiber transmissions, satellite uplink trucks, and digital media services.

“Encompass will be unique in our ability to provide such a broad range and scope of mission-critical services with the high level of performance and technical expertise on which our clients rely,” says Bill Tillson, President and COO of Encompass. “We greatly respect the talented team at Ascent’s content distribution business and expect them to play an important role as we seek to capture the significant opportunities that exist in today’s market, while remaining consistently focused on performance.”

The combined company’s client base will consist of major media companies, cable and sports networks, and government entities, including A&E Networks/Lifetime, Sony, NBCU, CBS, Disney/ABC, BBC Worldwide, U.S. Department of Defense, MTV, ESPN, NHL, Discovery Networks, DIRECTV Sports Networks, NFL Network, YES Network, Scripps, Hallmark, Channel Five and TV Guide.  Ascent’s video switch business give Encompass additional key customers such as CNN, CNBC, Bloomberg, Thomson Reuters, and the United Nations.

Financing for the transaction is being provided by Macquarie Capital and Tennenbaum Capital Partners, LLC.  Macquarie Capital is serving as the exclusive financial advisor to the Company.  Tennenbaum Capital is a current lender to and shareholder of Encompass and will continue to participate in both capacities.  Munger, Tolles & Olson LLP served as primary legal advisor.  The transaction is subject to customary closing conditions, including approval by Ascent shareholders, regulatory clearances, and the transfer of certain FCC licenses.  Subject to fulfillment of these conditions, the transaction is expected to close in the first quarter of 2011.