NBC, GE Cap buy 15%, up to 39.9%, of ValueVision

NBC and GE Capital announced they have agreed to pay $44 million for 15% of ValueVision Intl., the third-largest home shopping network.

The deal is designed to boost ValueVision’s cable distribution and provide a way for the companies to jointly explore development of Internet and electronic commerce opportunities.

NBC and GE Capital have two years to exercise warrants of common stock that will give them a total of 19.9% ownership in ValueVision for an additional $12 million. NBC and GE Capital also have an option to increase their ownership to 39.9%.

ValueVision is a distant third in the home shopping race to Home Shopping Network and QVC. ValueVision can be seen in 21 million homes but because many of those are only part-time carriage, the network has 14 million “full-time equivalent” homes.

E-commerce plans

Tom Rogers, president of NBC Cable and executive VP of NBC, said the Peacock’s first goal after closing the deal in several months was to use NBC Cable’s affiliate sales team to increase ValueVision’s distribution. Secondly, Rogers said that the deal will help NBC get into e-commerce.

“NBC’s goal over time is to turn viewers into buyers,” Rogers said. “Our relationship with ValueVision can be crucial in this regard.”

Rogers adds that ValueVision will also play a part in NBC Cable’s affiliate sales activities.

In an effort to offset the high price NBC paid to acquire 10 years’ worth of Olympics, NBC is planning to schedule some of its 2000 Olympics coverage in Sydney on CNBC and MSNBC and extract a surcharge from cable operators.

In the next year, NBC also must renew its affiliate contracts for CNBC and MSNBC, which could be a tough negotiation if cable ops feel they’re being forced to pay a surcharge for the additional Olympics coverage.

During a conference call Tuesday devoted to NBC’s investment in ValueVision, Rogers said the Olympics deal, new CNBC and MSNBC contracts and distribution for ValueVision would all become part of the same brought negotiation.

Free channels

Rogers pointed out that, unlike regular cable networks that require a monthly license fee, home-shopping channels are free of charge and pay operators a percentage of merchandise sales.

“As we enter into renewal discussions with CNBC and MSNBC, Olympics cable carriage and retransmission consent, we have many items to discuss in order to drive ValueVision distribution forward,” Rogers said.

Cable operators said they expected NBC to ask them soon to agree to pay surcharges to carry the Olympics on CNBC and MSNBC. They added they were confused about why NBC would invest in ValueVision.

“Why does it want to launch a third home shopping service?” asked one top 10 cable op. “Having two is too much.”

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