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Disney, Hearst, NBC U Talk AETN Restructuring

Partners may fold Lifetime into new joint venture, give NBC U stake 6/04/2009 12:00:00 PM Eastern

Posted June 3 at 6:17 p.m. ET

Disney-ABC Television, Hearst Corporation and NBC Universal are discussing a change in their joint ownership of A&E Television Networks, according to three separate sources. The three partners are talking about creating a new joint venture which would fold in women’s cable brand Lifetime, giving NBC Universal a stake in the bigger company.

“There is some discussion of taking A&E, History and Lifetime and putting them together with the same three players,” said one source close to talks. Hearst and ABC also jointly own ESPN, though it’s not thought to be part of the discussion. A separate executive said a deal would likely be made within the month.

Disney-ABC TV and Hearst each own 37.5% in A&E Television Networks and NBC Universal holds the remaining 25%. Lifetime is run by a 50/50 joint venture of Hearst and Walt Disney Co, called Lifetime Entertainment Services.

When complete, the deal will expand a growing relationship between Disney-ABC and NBC Universal which are also partners in the online video company Hulu. Disney announced a deal for an approximate 30% stake in the venture, also owned by News Corp. in April, NBC Universal, a unit of General Electric, had expressed a desire to own more cable programming assets.

A&E Television Networks owns brands including A&E Network, History Channel, Bio, Military History, Crime & Investigation and History en espanol, while Lifetime operates Lifetime Movie Network. The partners have been discussing a possible deal for the past 12 months, but the problem for anyone doing deals in this down market is attempting to value individual assets.

The deal would appear to make perfect sense for NBCU given its clear strategy of targeting women via a cross-the-board corporate effort dubbed, Women@NBCU. A piece of the Lifetime franchise might even goose its iVillage acquisition, as the Website also targets women. NBCU houses several femme-oriented channels including Bravo, USA and Oxygen. A deal for a piece of Lifetime would also give NBC Universal chief executive, Jeff Zucker, the last laugh in the battle over rights to the Bravo TV series Project Runway which will air on Lifetime in August following a legal battle.

A spokesman for Hearst said: “We have many partners and are constantly reviewing our businesses. We have no announcements.”

NBC Universal gained its stake in A&E Television in 1984 following a merger between two services, ARTS, and another, Entertainment Channels. ARTS, then owned by Capital Cities/ABC and Hearst, joined with NBC’s previous owner RCA and Rockefeller Center Inc. to form the new high-brow arts channel A&E. The channel inherited much of the BBC’s programming and in its early days aired such things as the Bastille Day celebrations from Paris. Now A&E is better know for Dog The Bounty Hunter. According to TNS Media Intelligence A&E Television Networks took in $771 million in 2008.

As early as May 2008, Disney CEO Bob Iger signaled to Multichannel News that a change of ownership of the company might be in the cards. Iger is quoted as saying that it would make sense to put Lifetime and A&E together, “We leave some money on the table by not managing them as a whole, meaning one company.”

He added, “Unwinding decades-old partnerships gets kind of complicated. It takes two and, in A&E’s case, three partners to tango. There are some tax liability issues, not that they can’t be dealt with. We’ve talked about it over time seeing whether there is a way to restructure in some fashion and we will continue to explore those discussions.”

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