NBC Universal has swooped on Sparrowhawk Media, the London-based owner of the Hallmark Channel, in a deal worth around $350 million (£175 million).

The sale of the business headed by David Elstein, the former chief executive of Channel 5, means that his backers, Providence and 3i, roughly doubled their original $130 million investment in 2½ years. Mr Elstein said that Sparrowhawk had almost doubled its profits by cutting costs and launching country-specific channels to replace its pan-regional network in Eastern Europe. “We spent a lot of time fielding approaches; it was a question of judging the right time to sell,” he said.

Despite the profit, Sparrowhawk was originally created with the intention of mopping up the nonUS cable channels owned by American broadcasters. Ironically, at one point, the venture had talks about buying NBC Universal’s own overseas channels, headed by the Sci-Fi Network, but that discussion did not bear fruit.

Once it became clear that it was unlikely to grow dramatically, the strategy changed. The owners decided to accept an offer from General Electric’s NBC Universal, which, under the new leadership of Jeff Zucker, had decided to boost its international exposure. No formal auction was conducted and neither side used banks, cutting down on transaction fees.

Sparrowhawk acquired the Hallmark international channels in April 2005 for $242 million from Crown Media, a subsidiary of the Hallmark greeting card group. The buyer borrowed a little over $100 million, secured on the more established UK business, and no cash was taken out of the company during its joint-ownership by the private equity groups. The core Hallmark Channel has achieved modest success by offering viewers a diet of family-oriented American programming.

Mr Zucker said: “The Hallmark channels’ geographic breadth is of particular importance to us, as it will bolster our position in existing markets and boost our growth in Asia and Central and Eastern Europe.”

NBC Universal will own 30 channels outside America after completion and plans to raise that total to more than 50 in the next three years.

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