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Lionsgate Sells 49% Stake in TV Guide

28 May, 2009 By: Erik Gruenwedel


Lionsgate May 28 said it sold 49% interest in TV Guide Network and TVGuide.com to a private equity subsidiary of JPMorgan Chase for $123 million in cash.

One Equity Partners (OEP) retains the option of buying another 1% of TV Guide Network and TVGuide.com from Lionsgate under unspecified circumstances.

Santa Monica, Calif.-based Lionsgate acquired TV Guide Network, which reaches about 83 million homes, and TVGuide.com in February for $255 million from Macrovision Corp.

Allen Shapiro, former CEO of Dick Clark Productions, joins the joint venture as chairman, partnering with Lionsgate co-chairman and CEO Jon Feltheimer.

While at Dick Clark, Shapiro served as executive producer of “So You Think You Can Dance,” “The Golden Globes,” “American Music Awards,” “Academy of Country Music Awards” and “New Years Rockin’ Eve.”

The deal closes the loop for Shapiro and OEP, who in January saw a probable acquisition of TV Guide assets fall through when Macrovision decided to sell to Lionsgate.

David Miller, analyst with Caris & Co. in Los Angeles, said the asset sale was expected following Lionsgate’s disastrous third quarter when it reported $94 million in losses (spearheaded by theatrical write downs), prompting a hostile takeover attempt by principle investor Carl Icahn. He said conventional wisdom suggested taking on a partner with TV Guide that allowed Lionsgate to maintain full earnings from the deal (before taxes and depreciation) while splitting the costs.

“It’s not a deal they needed to do, but it does bolster the balance sheet,” Miller said.

Separately, Lionsgate said it remained committed to the Oct. 1 launch of Epix pay-TV channel, a joint venture (that includes a streaming component) with Metro-Goldwyn-Mayer and Paramount Studios, despite the lack of announced carriage deals with cable or satellite operators.

“That’s going to be competition for Netflix, which will be very interesting,” Miller said.

Heretofore, landing distribution with major cable operators such as Comcast and Time Warner has been difficult due to the recession and consumer pullback regarding paying for premium content on their monthly cable bills.

“What makes [Wall Street] so nervous about Epix is, where is the carriage agreement?” Miller said. “Cable companies may be pretty reticent to take on another pay-TV service.”

The analyst said that once a major cable operator is signed, other MSOs, including satellite, will fall in line.

The studio reports fourth-quarter results June 1.

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