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Time Warner breathes life into Oxygen

11/01/2008 08:00:00 PM Eastern

Amidst deep skepticism of its ability to survive, Oxygen Media has scored big by securing a distribution deal on AOL Time Warner cable systems.

The deal will give Oxygen the bulk of the systems on the second-largest MSO. That, in addition to a planned move to a more favorable tier on DirecTV, is expected to help lift the women-targeted network from 14 million homes today to 42 million by the end of 2002.

AOL Time Warner also increased its existing minority stake in Oxygen, injecting an undisclosed amount of cash, and cut a new deal to market and promote Oxygen's Web sites.

The deal marks a new direction for Time Warner Cable, which has long been slow to offer carriage even to networks owned by Time Warner. "Who's my worst customer?" asked an executive at one network in the AOL Time Warner family. "Joe Collins," chairman of Time Warner Cable. Various CNN spin-offs long had a tough time getting carried by Time Warner Cable.

Oxygen Chairman Geraldine Laybourne has no complaints about Time Warner Cable. "They had the standard resistance that anybody has," she said. "It was mostly the price," since Oxygen is charging around 19 cents per sub, high for a startup.

Still, AOL Time Warner COO Bob Pittman is putting a much higher priority on having the company's divisions support each other, and, with AOL an early investor in Oxygen, that means longtime Pittman pal Laybourne is getting carriage quickly. The deal assures Oxygen of temporary carriage on the company's digital tiers this summer, reaching around 2 million subs.

By fall of next year, AOL will carry Oxygen on systems serving 10 million, or 80% of its 12.7 million subscriber base.

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