Lionsgate Entertainment, the studio that produces cable stalwarts like Mad Men, Weeds and Nurse Jackie, has hired an investment banker and is considering a sale of its TV Guide Network channel, according to a report in the New York Post.
Lionsgate purchased TV Guide Network in February 2009 for about $240 million and in May of that year sold 49% of the network to JP Morgan Chase's One Equity Partners and Allen Shapiro for about $122 million.
According to the Post, Lionsgate hired an investment banker about a month ago and has spoken to several interested parties about the channel. Lionsgate's options include selling its 51% stake in the network to its partners, acquiring its partners' 49% interest or selling the entire network outright to a third party. According to sources familiar with the situation, the third option is the most likely.
Since buying TV Guide Network in 2009, Lions Gate has tried to beef up the channel, adding original programming like Nail Files and the upcoming Hollywood Moms' Night and Wilson Phillips: Still Holding On, along with episodes of Weeds, Curb Your Enthusiasm and movies. Lionsgate has also made moves to make the channel full-screen in the majority of its markets -- some of its old contracts required digital channel listings to scroll on as much as half of its TV screens. When Lionsgate bought the channel in 2009 it had about 32% full-screen penetration. That has increased to 60% in 2011 and the company has targeted 80% full-screen penetration by the end of this year.
A Lionsgate spokesman declined comment.
Lionsgate had high hopes for the channel as a potential outlet for its content, but its cachet has waned somewhat since October 2009 when it partnered with Viacom's Paramount studio and Metro-Goldwyn Mayer to form Epix, a premium entertainment service available in about 30 million homes.
Despite low ratings -- TV Guide averaged about 84,000 viewers in 2011, down 20% from 105,000 according to the Post, citing Nielsen ratings provided by TVBytheNumbers.com -- the network is available in about 83 million homes, which would make it attractive to both financial and strategic players.
Lionsgate has been monetizing its non-core assets over the past several months -- in June it sold Maple Pictures to Alliance Films for about $38.5 million.
In a research note, Wunderlich Securities media analyst Matt Harrigan said Lionsgate is "apt to continue reviewing sale of peripheral assets where the market does not assign value, including its TV Guide Network interest."