Studio buys network for $925 million
NBC Universal’s $925 million acquisition of femme-focused cabler Oxygen promises to shake up the cable landscape – both inside and outside the Peacock.
Internally, Oxygen will give NBC U more breathing room for its increasingly crowded cable exec suite. Bravo topper Lauren Zalaznick and USA/Sci Fi prexy Bonnie Hammer could each make a strong case to head the cable unit, and the addition of a shiny new net will make it easier for recently upped NBC U cable/digital content prexy Jeff Gaspin to expand the portfolios of both execs.
Outside the NBC universe, the Peacock’s prowess at pumping up cable nets – it transformed Bravo from an also-ran to a trendsetter – means femme giant Lifetime may finally have some real competition, though it could take years for Oxygen to become a true player. Last quarter, Lifetime had four times the number of viewers 18-49 as Oxygen, according to Nielsen.
Oxygen, born in the froth of the Internet bubble in 1999 as a partnership among former Nickelodeon chief Geraldine Laybourne, Oprah Winfrey and Marcy Carsey of Carsey-Werner Co., will be added to NBC U’s cable properties including Bravo, USA Network and Sci Fi. Conglom also owns women-targeted Web portal iVillage.com.
Laybourne, who has been Oxygen’s CEO, will remain with the Gotham-based net until the end of the year, when NBC U chief exec Jeff Zucker will announce new management. Acquisition of the cabler, one of the few remaining independent properties, furthers Zucker’s stated strategy of expanding into high-growth areas of media while limiting exposure to mature businesses like broadcast TV. Indeed, NBC U said it would sell two Telemundo-owned stations to help finance the deal.
“Cable is really the core competency and strength of NBC U, and we believe it’s a real growth area for us,” Zucker said.
Gaspin was recently elevated to head all of NBC Universal’s non-NBC television assets, including cable, Telemundo, digital and syndication.
“Gerry has agreed to stay until the end of the year, and we will make further announcements before then,” Zucker said.
The long-rumored deal expands NBC U’s cable portfolio, which accounts for 50% of NBC Universal’s profits, and will allow the company to create what Zucker called a “virtual network” of female-skewing properties including Oxygen, Bravo, iVillage and “Today” that can be sold to advertisers.
“We will go to market with a suite of assets unmatched in the female demographic, but they will all remain strong, independent brands,” Zucker said.
NBC U has some practice integrating cable properties. NBC bought Bravo for $1.25 billion in 2002 and then integrated USA and Sci Fi after the merger of NBC and Vivendi Universal Entertainment in 2004.
In 2006, NBC Universal snapped up another product of the dot-com boom, iVillage, for $600 million, and has had mixed results. Synergies through “Today” have proved elusive, and the syndie daytime skein “iVillage Live” has been a ratings flop.
Zucker made it clear that Oxygen would be operated independently of iVillage, and its assets would report to Gaspin, not digital chief Beth Comstock, who oversees iVillage as well as NBC U ad sales.
NBC Universal is paying the equivalent of $12 per subscriber for the net. It expects to achieve $35 million in cost savings in 2008 through job cuts, new programming outlets and other synergies by integrating it into its existing cable portfolio.
On a conference call, NBC U execs said Oxygen would benefit from promotion on “Today,” Bravo, iVillage and other NBC U properties.
Oxygen-branded segments will start appearing on “Today,” Zucker said, much like the current “Top Chef” and “Project Runway” promotions for Bravo.
Gaspin said the company would spend the next month going inside Oxygen and studying its operations and staff before concluding how it will be integrated and where cuts can be made. The programming, he said, reaches a female demo not served by Bravo.
“Many of the shows on Oxygen were pitched to Bravo, and Bravo thought they were a little too young for them,” he said.
Oxygen, which at one time counted Paul Allen among its investors, has distribution in 74 million homes and is targeted at young, upscale women. Its original series include “Campus Ladies” and “The Bad Girls Club.” Net is a fraction the size of Disney/Hearst joint venture Lifetime, which is distributed in 96 million homes. Cablevision’s smaller We TV has distribution in 67 million homes.
Oxygen averaged 308,000 viewers in primetime in the third quarter of 2007, a 4% increase from last year, according to Nielsen Media Research.
NBC U said it expects the Oxygen deal to close in November.
Proceeds from the two Telemundo-owned independent stations going on the block–one in Los Angeles and one in Puerto Rico–will be used to help finance the deal.
The station in Los Angeles was NBC U’s third in the market and thus had to be sold at some point to comply with FCC rules.
(John Dempsey in New York and Josef Adalian in Hollywood contributed to this report.)