NEW YORK NBC Universal snapped up cable network Oxygen on Tuesday for $925 million.
The seven-year-old, female-focused independent cable channel will complement what NBCU is calling a "virtual women's network" of assets that will be shopped to Madison Avenue, including online acquisition iVillage, NBC morning franchise Today and cable channel Bravo.
"Oxygen fits in perfectly and will really give us a great leadership position in the female demographic category," NBCU president and CEO Jeff Zucker said in a conference call with reporters.
Oxygen owners including Oprah Winfrey, Paul Allen, Marcy Carsey, Tom Werner and Caryn Mandabach were reportedly interested in unloading the property given the challenges independent cable operations face. News of negotiations between the two companies was first reported in The Hollywood Reporter.
NBCU said it would finance the Oxygen deal mostly by selling two independent Telemundo stations, KWHY Los Angeles and WKAQ San Juan, Puerto Rico.
Oxygen CEO Geraldine Laybourne, who founded the network and also had an ownership stake, will leave the company by year's end. She declined to discuss her plans.
Oxygen will come under the portfolio of Jeff Gaspin, president of NBCU TV. He is expected to tap an executive to run the network in the coming weeks.
NBCU execs cited NBC's 2002 acquisition of Bravo as a useful guidepost for what to expect with Oxygen. But Gaspin noted that Oxygen, which is in about 74 million homes, is in better position than Bravo was when NBC took it over and brought it from 54 million to its current distribution base of 80 million.
"We think we can do what we did with Bravo, but the task is not as great," Gaspin said.
Executives also referenced the success they have had investing in programming and marketing for USA Network and Sci Fi Channel since those cable outlets came into the Peacock's fold in the 2004 merger with Vivendi Universal Entertainment.
Laybourne indicated that NBCU's brands will give Oxygen crucial exposure. "What is apparent now is that we need cross promotion, and that is really the biggest issue for Oxygen," Laybourne said. "That was the attraction of NBC, plus the fact it has such quality brands."
Programming-wise, Gaspin said Oxygen will continue to target women ages 18-34, compared to Bravo's focus on women 18-54.
Execs also signaled that NBC properties like Today could promote some of the network's shows in similar fashion to how NBC's repurposing of Bravo's Queer Eye for the Straight Guy was key to elevating that cable channel. Oxygen potentially could replay Today segments.
Gaspin also cited on-demand offerings and digital subscriber growth as growth opportunities.
Zucker emphasized that the sale of the Telemundo stations should in no way be interpreted as a sign that NBCU is reducing its focus on Spanish-language offerings. KWHY is one of three stations it owns in Los Angeles, meaning that the company eventually would have had to sell one anyway to comply with media-ownership rules. There are no buyers to announce yet, Zucker said.
NBCU said the Oxygen acquisition would be accretive to earnings after the first full year, with revenue and cost synergies of about $35 million in 2008. NBCU management declined Tuesday to specify where those savings would come from but said it would focus on the proper integration in the coming weeks.
However, execs signaled that the price tag made the acquisition very affordable. NBCU paid less than $12 per subscriber for Oxygen, compared with the $22 it paid for Bravo.
Laybourne and Oxygen president and COO Lisa Gersh said in a memo to staff that they managed to build "a profitable and high-growth business," adding, "NBC will grow Oxygen into a behemoth."
The deal is expected to close in November.