As soon as next week Lionsgate is expected to close a deal to sell about half of TVGN, formerly known as the TV Guide Network, to CBS Inc. It marks a change in strategy for the mini-major, which set out more than a year ago to sell the cable network outright.
Lionsgate and CBS both declined to comment on the pending transaction but sources tell The Hollywood Reporter that the price CBS is paying for 50 percent – about $100 million — is less than half of what Lionsgate paid for the TV Guide Network in early 2009 for 100 percent of the company. Lionsgate paid $250 million for the entire network.
It is also less than the $123 million Lionsgate sold half for in 2009 to One Equity Partners.
The deal also apparently includes TVGuide.com, which has shown growth by adding strong content; and will fit with other CBS digital properties. The TV Guide print magazine is owned separately by Open Gate Capital and will not be part of the deal with CBS.
In November 2012, there were reports Lionsgate was valuing TV Guide and its website at about $370 million, well above the value based on the price CBS is expected to pay.
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The TV Guide Network was re-branded as TVGN earlier this year, around the time Mike Mahan stepped down as president and was replaced by Dennis Miller, a consultant to Lionsgate. The re-brand was meant to move the channel away from its image as a listing source. The reasoning was other channels have gone to just initials, such as AMC, TLC and GSN.
For CBS, it is seen as a reasonable way to acquire a cable channel, broadening out a portfolio which already includes the top rated TV broadcast network, a pay TV service, a growing digital presence, a sports channel and half of the CW Network. Some of the money for the acquisition is expected to come from the recent sale by CBS of its outdoor billboard business.
What convinced Lionsgate to hold on to half of TV Guide was the opportunity to partner with CBS, say other sources, which they see as a strategic partner who brings content, experience and abundant resources to the venture. Lionsgate, in recent years, has supplied programming to CBS and its Showtime subsidiary (Weeds, Nurse Jackie), so the two sides have a longstanding relationship.
Having CBS is strategic compared to the current owner of the half being sold, One Equity Partners, a division of JP Morgan Chase, the big investment bank. One Equity Partners is a financial entity but brought nothing to TV Guide in terms of content or experience running an entertainment business.
CBS took its time in evaluating the TVGN opportunity, which for the first time since the split from Viacom in 2009 gives them control of an advertiser supported basic cable network that carries general entertainment programming. Discovery Networks was also reportedly interested in the acquisition but sources say it ultimately decided that it was not the right fit for them.
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What CBS will get is a nearly fully distributed network, in about 80 million out of just over 100 million American TV homes, that has been transformed in recent years. It started out as a barker channel that was mostly about a scroll of listings, with ads and infomercials playing on top.
Today it carries a lot of older shows like Ugly Betty and Who’s The Boss, as well as some original series such as Celebrity Style Story.As of January, only about 12 percent of the homes where it plays still had listings as well as video content on the screen. The rest see a full screen of content that has included movies, series and specials, as well as some infomercials.