NEW YORK -- AOL Time Warner Inc. and Oxygen Media Inc. on Tuesday said they will expand their existing online alliance to include "extensive" cable distribution of Oxygen TV to a majority of Time Warner Cable households.
AOL Time Warner (AOL) also said it will make an unspecified equity investment in Oxygen Media.
An AOL Time Warner spokesman declined to elaborate on the equity investment, while an Oxygen Media spokeswoman said AOL Time Warner will remain a minority shareholder. The agreement builds on a relationship that began in 1998, when America Online became one of the first investors in the women's cable channel.
Oxygen, which has had a tough time since its debut in February 2000, has been searching for strategic investors and partners who could give it a higher profile and more viewers.
Cable operators hadn't signed up, in part, because they believed Oxygen was demanding too much money for an unproven network, The Wall Street Journal reported last fall. Oxygen also had brashly pushed for carriage on the choice analog channel tier where CNN and other favorites are carried. Most new programmers pay cable operators for carriage on that tier -- not the other way around.
To complicate Oxygen's problems, most big advertisers typically don't like to spend much money with any cable-TV network that isn't carried in at least 50 million households.
In response, Oxygen revamped its prime-time schedule and also held discussions with big media companies about a variety of arrangements. Talks ranged from minor programming partnerships to offers to sell a more significant stake in the company, people familiar with the situation told the Journal. Companies Oxygen had spoken to included General Electric Co.'s (GE) NBC; Viacom Inc. (VIA); Time Warner Inc., before AOL completed its takeover of the media giant; and E.W. Scripps Co. (SSP).
People familiar with the situation also told the Journal that Oxygen was offering potential investors a chance to get as much as 30% to 50% of the company. Possible forms of payment included carriage, programming resources or some other type of strategic support.
The AOL Time Warner deal will make Oxygen available to 10 million predominantly analog subscribers by the third quarter of 2002 on Time Warner Cable, the nation's second-largest cable operator.
In addition, as part of an increased marketing commitment, the distribution of Oxygen's content will increase significantly across America Online's family of interactive brands, the companies said. Oxygen's Web brands are currently featured on the some of the content channels across the America Online service, Netscape.com, ICQ, AOL.com and CompuServe.com.
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