Computer billionaire Paul Allen is negotiating an agreement to invest $100 million in Oxygen Media for less than 10% of the venture, which was formed last year by cable veteran Geraldine Laybourne to produce women's programming for television and the Internet.
Neither party would comment, but sources close to Allen say the deal underscores the Microsoft Corp. co-founder's growing appetite for content as a result of a one-year buying blitz that has made him the nation's fourth-largest cable operator. It could also ensure Oxygen's launch of the first head-to-head competitor to Lifetime Television, one of the few cable networks that specifically targets women.
For the Record
Los Angeles Times Friday June 11, 1999 Home Edition Business Part C Page 3 Financial Desk 1 inches; 35 words Type of Material: Correction
Equity stake--An article in The Times on June 4 about a potential $100-million investment by Vulcan Ventures in Oxygen Media miscalculated the equity stake the Paul Allen-owned investment firm would get. Vulcan would get about 13% equity in Oxygen.
Although Laybourne is respected in the cable industry for building Nickelodeon into a forceful children's brand for Viacom Corp., the February launch of her new cable channel has been uncertain because of the lack of space on overcrowded cable systems.
Cable operators also have been reluctant to pay Oxygen a licensing fee without the typical upfront financial enticements that have become standard practice among new networks looking for carriage. Oxygen has been offering no "launch support."
But under the deal with Allen, his investment arm, Vulcan Ventures Inc., will take a 7% equity stake, and his cable company, Charter Communications, is expected to distribute the channel to some or all of the 5.5 million subscribers it will serve once pending acquisitions are completed.
That deal, along with another that sources say is in advanced negotiations with Cox Communications, could help lock in distribution promised last year by Tele-Communications Inc., which is now owned by AT&T. To jump-start the new channel and improve the cable choices for women, who watch more television than children or men but have fewer services devoted to their interests, TCI agreed to eventually carry the channel to 7 million of its 11 million subscribers. But the deal was contingent on Oxygen securing 5 million additional subscribers from other cable operators.
Sources say Cox, which has 5 million cable customers, may also take an equity stake as part of its deal.
Laybourne, who resigned from Viacom in 1996 to become head of cable at Walt Disney Co., left Disney last spring to form Oxygen, eager to build a media company focused on an audience she calls underserved and economically underappreciated.
Laybourne has some gold-plated partners, including America Online, talk show host Oprah Winfrey and the principals of prime-time television's Carsey-Werner Co., the producers of such hit shows as "The Cosby Show," "Roseanne," "3rd Rock From the Sun," and "That '70s Show."
Sources say Oxygen has also secured the talents of actress Candice Bergen to host a nightly talk show. Bergen's series, "Murphy Brown," airs in reruns on Lifetime, on whose board Laybourne served before she resigned from Disney.