CBS Corp. is on the verge of acquiring an asset that will round out its television portfolio—the hitherto elusive fully distributed ad-supported cable network.
According to multiple sources, CBS is close to securing a 50 percent stake in TV Guide Network, making it an equal partner with Lionsgate Television. The company is buying out One Equity Partners, a division of JPMorgan Chase.
At $100 million, the price of getting a toehold in the basic-cable space is a relative bargain; Lionsgate purchased TV Guide Net in 2009 for a figure just shy of $242 million.
The deal is expected to close sometime next week. Coincidentally, a rebranding effort that will eliminate the last vestiges of the channel’s origins as an interactive program guide is planned for late March. The new moniker, TVGN, is of a piece with a longstanding tradition wherein a cable network dumps its established brand for a more generic cluster of initials (see also: AMC, ID, TLC).
Lionsgate began the process of trademarking TVGN in September 2012.
UPDATE: The deal closed on Tuesday, March 26. In a statement released this afternoon, CBS Corp. president and CEO Les Moonves said the acquisition marked “a strategic way for CBS to use its content brands and gain access to a highly distributed basic cable network that has a lot of upside.”
The partnership also gives CBS a 50 percent stake in TVGuide.com.
CBS has been kicking the tires on a deal to partner with Lionsgate for some time. The two companies have collaborated on the programming side, as Lionsgate has produced series like Weeds and Nurse Jackie for the CBS-owned Showtime.
TVGN is available in 80.9 million homes, of which only 10 million are still served the old scrolling-listings format. The full-screen, ad-supported service runs acquired series (Dharma & Greg, Ugly Betty, Cybill) and repurposed theatricals like Tin Cup and White Men Can’t Jump.
Per SNL Kagan estimates, the channel doesn’t carry a lot of weight with operators, scratching out an average carriage fee of just 3 cents per subscriber per month. Last year, the network took in an estimated $19.4 million in affiliate revenue. Ad sales accounted for some $107.5 million in annual revenue.
While its distribution is nothing to sneeze at—reaching 101 million households, Turner’s TNT and TBS boast the broadest footprint—the channel is generally confined to the nosebleed seats. On Time Warner Cable’s New York City grid, TV Guide is available on channel 157, where it nestles between the Cablevision/Newsday Media Holdings outlet News 12 and News Corp.’s National Geographic Wild.
Comcast slots TVGN on channel 100.
Speaking at a Deutsche Bank media conference earlier this month, Moonves allowed that while he was interested in bolstering his portfolio with a cable property, he wasn’t planning on building anything from the ground up.
“Would we like a general entertainment cable network? Sure, we would,” Moonves said. “Do I think we could run it extremely well? Of course we could. We have a great deal of production, we have a great deal of expertise in that. Could CBS 2 be far more effective than a number of cable channels that are currently out there now? Absolutely. But I think the last thing the cable operators want is another general entertainment channel from us.”
Ironically, the last obstacle to CBS’ acquisition of the TVGN stake may have been kicked aside by Oprah Winfrey, whose long-running daytime talk show was syndicated by CBS Television Distribution. Last fall, Oprah signed a deal with Tyler Perry to produce scripted shows for her OWN channel, effectively ending Perry’s talks with Lionsgate to rebrand TV Guide Net as Tyler TV.
CBS Corp. also has invested in a pair of lesser-distributed cable channels. The company owns the CBS Sports Network, which reaches 46 subscribers, and has an equity stake in AXS TV, a joint venture developed by Mark Cuban Companies, AEG, Creative Artists Agency and Ryan Seacrest Media. Formerly known as HD Net, AXS is in 40 million households.