General Electric wants the Financial News Network. Badly.
GE (via subsidiary Consumer News & Business Channel) proved that last week with its 11th-hour purchase of FNN for $105 million cash. But, even now, it may not be a done deal
The signed definitive agreement apparently supersedes an agreement in principle reached Feb. 12 to sell FNN to a partnership of Dow Jones & Co. and Westinghouse Broadcasting for about $90 million.
As for the future of CNBC and FNN, Tom Rogers, president of NBC cable and business development, said each service has some “terrific elements,” and pieces of each will be combined for the new version. The services’ daytime programming would be merged, while primetime would be modeled more on CNBC’s format. FNN’s weekend sports coverage is likely to be dumped.
Some industry savants view the bid as a last-ditch effort by NBC to make good on what has been a less than sterling entrance into the cable programming realm.
“This a face-saving move,” says one senior executive at a rival network. “If NBC can’t close this deal, it would probably have to close up shop on CNBC.”
And the last thing NBC needs now is more bad news. The GE broadcast unit is no longer the dominant broadcast network. Its primetime lineup is aging, with several hit shows up for renewal that will cost the net plenty. Reports have been surfacing for weeks about massive cutbacks at the Peacock web, fueling rumors that GE is stripping down operations for a sale.
But at last week’s NBC winter affiliate meeting, affil execs say NBC topper Bob Wright gave the impression that GE was in the tv business to stay. In private conversations, network execs admitted that big staff cutbacks were ahead but that they were in keeping with GE’s view of the industry as cyclical. The pending FNN deal may be GE’s way of cementing its commitment; industry sources say the decision to go after FNN came from the office of GE supremo Jack Welch.
Meanwhile, Cablevision Systems Corp., NBC’s partner in CNBC and a handful of cable services, will not be part of the FNN deal and will transfer its own stake in CNBC back to NBC. The two will remain partners in Bravo, American Movie Classics, SportsChannel America, regional sports networks and regional news operations.
Cablevision and NBC linked in 1988 in a deal whereby NBC paid Cablevision $137.5 million to get 50% of Cablevision’s Rainbow Programming Services.
Sources familiar with the NBC/Cablevision relationship have said that Cablevision execs were not happy with the operation of CNBC.
According to Rogers, there was no mystery to Cablevision’s not wanting to be part of the deal. There had been many discussions between the companies, and Cablevision decided it wanted to put its resources into its own ventures.
Concerning GE’s last-minute move, FNN interim co-chief exec Alan Hirschfield said the FNN board of directors had no choice but to consider the offer, “given the substantial disparity in price.”
CNBC offered $105 million in cash for the media assets of FNN; but, unlike the Dow Jones/Westinghouse offer, the CNBC deal excludes almost all operating hardware (which Hirschfield valued at $15 million to $20 million).
In a Feb. 26 joint letter to the FNN board of directors, Dow Jones and Westinghouse said they were “extremely disturbed” by the CNBC transaction and that they wanted to consummate the deal they had negotiated. The companies also indicated a willingness to top CNBC’s bid.
The companies said FNN’s board “should understand that we would hope to be in a position to revise the terms of our offer, including the cash consideration, in a fashion that would make it substantially more advantageous to FNN than the GE/NBC $105 million offer.”
Despite the signed agreement, there is speculation that the sale of FNN is still not a done deal. “There is still the possibility of another bidder or bidders coming forward,” says analyst Arthur Strachman of Hy Strachman & Associates.
He added that the FNN board’s responsibility is still to its shareholders. If a higher bid is received, it would have to be considered despite the CNBC agreement.
Hirschfield did not rule out the possibility of other bids during the bankruptcy process, which FNN initiated March 1. The bankruptcy judge will evaluate the merits of any additional bids received.
Since FNN has signed a definitive agreement with GE, another bid would have to be substantially higher to cover built-in penalties and break-up charges.
Paul Noglows, J. Max Robins and Richard Huff contributed to this report.