ENTERTAINMENT : Cap Cities to Buy Stake in Scandinavia TV

Capital Cities/ABC Inc. has agreed to buy a 16% stake in Scandinavian Broadcasting System, which owns four TV stations, and may increase its interest to 25%, the companies announced Tuesday.

Cap Cities, which owns ABC Television Network and a range of other media properties, said it has agreed to buy 1.6 million shares of Scandinavian Broadcasting stock from existing shareholders. It also agreed to buy warrants entitling it to purchase an additional 500,000 shares, or 5%, for $25 a share, and it can raise its overall stake in the company to 25% by purchasing more stock on the open market.

The terms of the deal were not disclosed, but it was believed to be worth $20 million to $25 million. It is expected to close by the end of the month.

“This investment is another important building block in our plans to be a long-term player of consequence in the global arena,” said Daniel Burke, president and chief executive of Capital Cities/ABC.

Herbert Granath, president of Capital Cities’ ABC Cable and International Group, said Scandinavian Broadcasting “fits in well with our overall strategy in Europe, and it provides a solid opportunity to help develop a business with great potential.”

Scandinavian Broadcasting System’s four TV stations include TV Norge in Norway, TV5 in Sweden and Kanal2 and TV Fynboen in Denmark.

It also provides programming and sells advertising for Kanal Denmark, which operates five TV stations reaching 55% of viewing households in Denmark.

Cap Cities surged $5.875 to $636.625 a share on the New York Stock Exchange on Tuesday. Scandinavian Broadcasting rose $1.375, closing at $20 a share on Nasdaq.