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CBS taking minority stake in cable channel AXS

February 14, 2013|By Meg James
  • Taylor Swift in performance at the 55th Annual Grammy Awards, the kind of live event to which CBS would have special access with its new deal with AXS.
Taylor Swift in performance at the 55th Annual Grammy Awards, the kind of… (Robert Gauthier )

Broadcasting giant CBS Corp. is taking a minority stake in AXS TV, the nascent music-oriented cable channel owned by billionaire Mark Cuban and Los Angeles entertainment giant AEG.

CBS will receive an undisclosed interest in the high-definition television channel in exchange for providing programming and marketing to the joint venture.

With rights to such prominent events as the Grammy Awards, Broadway's Tony Awards and the Academy of Country Music Awards, CBS can give AXS a front row seat and backstage access that other channels lack.  Major programs will continue to air on the CBS broadcast network, but CBS plans to provide hours of additional coverage to its tentpole events with extras such as red carpet and backstage interviews. 

CBS also agreed to promote the channel and its events on CBS' top-rated television network, TV stations, radio stations and even billboards. The reach of CBS will significantly raise the profile of the budding channel that is available in 38 million homes -- about a third of the homes in the U.S. with televisions.

"This is really going to take AXS to the next level and really push us forward," said Cuban, who will continue to lead the network as chief executive and president. "Our partnership with CBS will give us access to more content, more live events and much more promotional power."

For its part, CBS gains ownership interest in the channel without having to extend any cash or stock.

"Everyone wins," CBS Chief Executive Leslie Moonves said. "We are providing our programming and promotion. The intent of this channel is to do live programming and events and we have some of the biggest live events, including the Grammys and the Tonys."

Of the major media companies, CBS has limited holdings in cable television, with just two cable operations -- premium channel Showtime and CBS Sports. The AXS deal gives CBS a beachhead in music and live events programming with a channel that has ambitions to be a culturally relevant player, particularly among young, trend-setting viewers.

"We have been looking to expand further into cable television and this is a step in the right direction," Moonves said. "And we are not expending a lot of money to do it."

AXS TV is a joint venture, formed last year between Cuban, who owns 50% of the channel, and AEG, Ryan Seacrest Media and Hollywood powerhouse talent firm Creative Artists Agency.  CBS did not disclose the percentage of its interest beyond saying it would be a "minority" interest."

"I've been working with Mark for two years now and this is a huge step forward," said Tim Lieweke, president and CEO of AEG.  "What we've learned is that if you don't have big brother then you are sitting out there alone in the cold.  Channels that are independent tend to get lost. And what we have found is a partner in CBS, which has the best network in the world today, and this makes it a great partnership.  We are already growing, but CBS will help us grow more."

The AXS cable network's programming includes concerts, comedy club acts, mixed-martial arts fighting and the news show "Dan Rather Reports."  The flagship show is "AXS Live," which was designed to be an ESPN-like "SportsCenter" for pop culture and music. Los Angeles-based AEG's downtown L.A. Live complex is the channel's on-air home.

"We have been doing pretty good; we are currently available in about 60% of the homes with high-definition television," Cuban said.  "When we started this channel we saw the missing link as music and, to a lesser extent, pop culture.  And increasingly, it's all about live events."

Social media have been "a game changer," Cuban said. People on Facebook and Twitter feel compelled to keep up with the conversation by watching live events on television. Television ratings for live events, such as the Oscars and the Grammys, have increased in recent years in large part because of social media.

"In this day and age, social media and live television is a driving force to create real-time conversations in pop culture," Cuban said.  That phenomenon will only continue, Cuban said, and the AXS channel is being designed to capitalize on the value of live programming to advertisers.

AXS, which launched in July and before AEG's involvement was known as HDNet, is also available in standard definition. However the channel  lacks distribution from several major cable operators, including Time Warner Cable.  It is available in homes that receive TV service from DirecTV, Dish, Comcast Cable and Charter Communications.

The CBS association is expected to give AXS a lift as the small cable channel tries to wrangle additional carriage from cable operators.

For AEG, the channel was designed to give the sports and entertainment giant an additional platform to promote its live entertainment business. AEG is a concert promoter and arena owner with a huge library of concerts. Its arenas also are used for high-profile events, such as the Grammys, which should also help grow the channel.

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