The news that content creator Discovery Communications (NASDAQ:DISCA) is partnering with Liberty Global to acquire UK-based All3Media, a leading producer and distributor of television content, means that the company is continuing to focus on aggressive expansion.

This latest announcement from Discovery highlights the company's two-pronged approach of expanding both its content genres and its geographic footprint. When viewed alongside Discovery's prior acquisitions in recent years, the move makes a great deal of sense and should benefit both the company and its shareholders in the long term.

Source: Discovery 

Analyzing the deal
On May 8, Discovery Communications (which owns and operates  popular nonfiction television networks like Discovery Channel and Animal Planet) released a statement detailing the 50/50 joint partnership with Liberty Global to acquire All3Media from the company's founders and the Permira funds. The joint venture will acquire All3Media at an enterprise value of approximately $930 million. Discovery and Liberty Global will each contribute $150 million in cash.  In its 2013 fiscal year, All3Media generated £505 million, or $696 million, in revenue. 

Under the deal, All3Media will remain an independent entity with its own management team and maintain its existing operating model. Discovery and Liberty Global will use their considerable industry positioning to serve and enhance All3Media's global partnerships. 

All3Media is the leading independent television, film and digital production/distribution company in the UK. With 26 creative centers in some of the world's largest markets, All3Media has a strong footprint in the U.S., Germany, the Netherlands and New Zealand and has offerings in popular content genres like drama, comedy and docudrama. 

Looking to make deals
Discovery has been in the headlines quite a bit over the last few years as a result of the deals the company has been making or looking to make. The company's two most recent deals, the acquisition of SBS Nordic from ProSiebenSat.1 in 2012  and the controlling interest in Eurosport International in 2014,  expanded Discovery's content genres and geographic markets significantly. The company gained exposure to sports and scripted drama for the first time ever after inking the aforementioned deals.

In December of 2013, Discovery was also rumored to be interested in acquiring smaller rival Scripps Networks Interactive (NASDAQ:SNI). Scripps, which produces and distributes similar nonfiction content via its popular networks like Food Network, HGTV, and Travel Channel, seemed like a match made in heaven. 

It would have allowed Discovery to increase its stranglehold on the nonfiction reality television segment while also eliminating a worthy competitor. Talks ended this January when it seemed that ownership at Scripps was reluctant to sell. 

However, all deals, whether they were made or not, were considered by company management for seemingly one primary reason: expanding Discovery's reach in either content offerings, geographic markets, or both.

To this end, management has succeeded with the joint acquisition of All3Media. Discovery will now have a stronger foothold in the comedy and drama segments as well as an increased presence in valuable geographic markets like Germany and the Netherlands.

In the company's announcement, Discovery CEO David Zaslav explained, "For Discovery Communications, the world's no. 1 pay-TV programmer, it has always been about creating compelling content for our global audiences, and this partnership is yet another way for us to work with the best storytellers in the business." 

CEO Zaslav concluded, "This venture allows us to work closely with Liberty Global, a valued partner and the largest international cable company, in managing a financially strong, innovative and creatively prolific production company. We are very excited to support All3Media's talented management team as they continue their steady growth around the world." 

Source: Discovery 

Bottom line
Discovery's recent joint acquisition of All3Media is in keeping with management's goal to expand and bolster the company's content offerings and increase its global reach. A more robustly stocked development pipeline and increased distribution platforms likely means less risk and more sustainable growth for investors in the long term.