Prevue Channel owner United Video Satellite Group agreed to buy News Corp's TV Guide magazine for $2 billion in stock and cash in a deal that gives United a new digital platform for TV listings.
Rupert Murdoch's News Corp. is swapping TV Guide for a 40 percent share of United Video Satellite Group.
Under the deal, News Corp. gets $800 million in cash, and $1.2 billion in United Video Satellite stock. United Video, which is controlled by cable giants TCI and Liberty, will issue 30 million shares of common stock to complete the transaction.
United Video rose as much as 1 1/14 to 38 1/4 on news of the deal. News Corp. rose as much as 1 1/16 to 24 5/8.
The transaction combines the 13-million circulation TV Guide magazine - the nation's best selling weekly - with the electronically distributed TV listings received by 50 million U.S. homes and an additional 3 million homes outside the U.S. by United Video's satellite network.
Wall Street has been critical of News Corp.'s ownership of TV Guide because of the heavy $2.8 billion price Murdoch paid for it some 10 years ago. The deal strengthens Tele-Communications International's CEO John Malone's hand with Murdoch. With the two media moguls teamed up on TV listings, Americans soon will be offered more choices for channels and listings via digital set-top boxes.
"This is another sign that digital set-top boxes will roll out," said Bishop Cheen, analyst with First Union Capital Markets in Charlotte, N.C.
"Malone gets a brand name asset with cash flow, a platform to launch an onscreen navigation system, an incredible database of programming and scheduling, and it's yet another platform where he and Rupert Murdoch are partners," Cheen said.
Cheen said the TV Guide name will boost the brand value of United Video's TV listings, thus helping to attract subscription fees and advertising money for the service.
TV Guide will continue on the newsstand, but the Prevue Channel services will be re-launched with the TV Guide name. Meanwhile, TV Guide may eventually shed its printed listings and instead focus on providing readers with entertainment and celebrity news.
Written by Steve Gelsi