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MTG set to pip Sky Vision to DRG deal

Underbelly

Patrick Svensk’s MTG Studios is set to acquire UK distributor DRG after outgunning Sky Vision in an auction for the company, TBI understands.

Sources close to the companies have said MTG Studios and Sky Vision are the remaining bidders in the process, with MTG set to win an auction process that began earlier this year due to its financial clout. Endemol is understood to have been in the final three bidders but dropped out of the race.

The deal is expected to be worth about £18 million (US$27.3 million). DRG turned over £23 million in the 12 months to March 31, 2012, though it made an overall loss of £268,369.

MTG Studios launched last year as the new content unit of Scandinavian pay TV broadcast giant Modern Times Group and includes producer Strix, which sells formats, and Romanian prodco Paprika in its stable.

Buying DRG would give MTG Studios both a standalone UK-based distribution wing and a foothold in the English-language market. One source said the latter point was a key growth strategy for Svensk, who was a key player at Zodiak TV, which later merged with RDF and became Zodiak Media. He joined as MTG Studios chairman and CEO in September 2011 and is also executive VP, content, MTG.

MTG Studios launched its own distribution arm last year and has rights to international formats such as The Farm.

It is understood BSkyB-owned Sky Vision would have merged DRG’s assets with its own to create one of the UK’s largest distribution outfits.

DRG was first put on the block in September last year following the departure of CEO Jeremy Fox. In January, around 10 potential buyers took a look at its wares, which include international rights to series such as comedy The Inbetweeners, Doc Martin and Australian drama Underbelly (though ITV Studios sells one season of the latter). It also has formats including Don’t Tell the Bride.

DRG’s backer Ingenious Media has previously played down suggestions the company is for sale but as a venture capital company is expected to sell at some point, and TBI understands a deal is imminent. Neither Ingenious nor DRG could be reached before press time.

Former CEO Fox launched DRG in 2006 with the backing of media investor Ingenious. It subsequently went on to buy Channel 4 International, iD Distribution, Zeal Entertainment and Portman Film and Television.