EXCLUSIVE: Lionsgate wants to unload TVGuide.com and, even more importantly, is at least considering an ownership change at TV Guide Network, which has been ordered to balance its books in anticipation of a potential sale. We hear that the studio has begun to interview investment bankers who can quietly sell the consumer website which, like the cable channel, is a 50-50 joint venture with JP Morgan Chase’s global private equity investment arm One Equity Partners. The website is thought to be worth anywhere from $50M to $100M. Lionsgate is intent on shedding what it considers to be non-core assets (just like Lionsgate recently sold its stake in Maple Pictures). TV Guide Network’s owners just secured long-term carriage agreements with the major cable operators, including Comcast, Time Warner Cable, and Charter, further increasing its value. But putting a dollar figure on the TV Guide Network suggests that Lionsgate and One Equity Partners want to at least begin a discussion that could lead to one of the partners buying the other out.
Lionsgate would seem to be the more likely buyer if things go that far: It has said that it wants to build its presence in TV channels; it also owns major stakes in Epix, FearNet, and Asia’s Tiger Gate. ”They’ve made it clear that they have a TV channel strategy,” says Hudson Square Research’s Marla Backer. Lionsgate paid $241.6M for the TV Guide website and network in February 2009. Three months later, One Equity Partners teamed up with investor and producer Allen Shapiro and paid $122.4M for half of the combined operation. Shapiro is chairman of TV Guide Network and TVGuide.com and is now taking on leadership of the network’s programming. (He initially was buying TV Guide from Macrovision until Lionsgate swooped in at the last minute. Ultimately, Shapiro secured a sizeable chunk of it.)
Lately, TV Guide Network has been undergoing a major revamp. It is ditching the on-screen program guides in favor of entertainment. Shapiro is even more heavilly in charge of programming decisions after Diana Robina recently left as EVP Programming and Marketing, a job she had held for a year and a half before sources say she may head to Lionsgate. Meanwhile, TV Guide Network has acquired syndication rights to series including Weeds, Curb Your Enthusiasm, and Ugly Betty. The channel also is beginning to offer original series including Nail Files, which debuted in June, and Hollywood Moms Club, which begins in November.
SNL Kagan estimates that TV Guide Network will generate about $107M in revenue in 2011 — that includes $86.3M from ad sales and $20.7M from affiliate fees. But Kagan also says that the channel’s CPM and ratings are declining: CPM has gone from $4.53 in 2008, to $4.08 in 2009, and $3.83 in 2010. Meanwhile the average prime time audience has gone from 180,000 in 2008, to 177,000 in 2009, and 138,000 in 2010.
Lionsgate completed the acquisition of TV Guide Network, which reaches approximately 83 million homes, for approximately $255M from Macrovision Solutions. Then Lionsgate sold a 49% stake in TV Guide Network and TVGuide.com to One Equity Partners and Allen Shapiro for about $123 million in cash. Under the terms of the deal, One Equity Partners retained the option of buying another 1% of TV Guide Network and TVGuide.com. Shapiro was named chairman of the joint venture, and along with Lionsgate co-chairman and CEO Jon Feltheimer head of the TV Guide Networks’ executive committee.