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CBS faces challenges and opportunities revamping TV Guide Network

March 28, 2013|By Meg James
  • CBS owns a stable of lucrative shows, including "NCIS." Pictured Sean Murray, left, and Mark Harmon in a scene from "NCIS."
CBS owns a stable of lucrative shows, including "NCIS." Pictured… (Cliff Lipson / AP )

CBS Corp. this week acquired 50% of TV Guide Network for a relative bargain — a little more than $100 million.

Consider that Al Jazeera, the Qatar-based media company, paid roughly five times more — a reported $500 million — to buy Current TV, the channel co-founded by Al Gore. Current was available in about 50 million homes in the U.S., and Al Jazeera saw the purchase as an efficient way to increase its distribution after struggling for years to gain carriage on U.S. cable systems.

TV Guide Network, in contrast, has far greater distribution. It is available in nearly 80 million homes — about four-fifths of all U.S. households that subscribe to pay TV. That greatly boosts prospects for the channel, co-owned by the Santa Monica-based film and television studio Lionsgate.

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However, the network — which also goes by TVGN but is not connected in any way to TV Guide, the television listings magazine — was on the block for about a year. It was seen as a lemon. 

TVGN collects 2 cents per subscriber each month, according to estimates by consulting firm SNL Kagan. That is a paltry sum in an industry where most general entertainment channels generate as much as 20 cents to 50 cents per subscriber — sometimes even more — each month.

Last year was TVGN's worse year, financially, in more than a decade. It generated $88 million in revenue, according to calculations by SNL Kagan's cable analyst Derek Baine. That was 17% less than in 2011 and nearly 30% less than 2006, the channel's high-water mark when it brought in $124 million in revenue.

Lionsgate, which acquired the network four years ago, experimented with original programming with shows like "Celebrity Style Story." Programming expenses more than doubled last year to $58.8 million, contributing to the lower bottom line.

CBS could decide to use the channel to showcase classic TV shows from its library, which boasts such treasures as "I Love Lucy," "Beverly Hillbillies," "Cheers" and "CSI: Crime Scene Investigation." TVGN already runs repeats of old network hits such as "Designing Women" and "Ugly Betty."

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CBS and Lionsgate said they planned to rebrand the network. CBS executives were not available to discuss their plans, but it will be significant to see if the companies further distance themselves from the moniker of TV Guide, a cherished brand in the TV industry, as Lionsgate appeared to when it pared the name to TVGN.

CBS' sister company, Viacom Inc., owns the TV Land channel, which was used primarily as a rest home for classic shows before Viacom management gave the channel a face lift with original programs.  TV Land scored with "Hot in Cleveland" with Betty White.

There is room for another such channel.  CBS executives — most noteably CEO Leslie Moonves — are the best in the business in turning lemons into lemonade. It took years, but CBS — once considered the Norma Desmond of television — is now the No. 1 network.

CBS excels at reviving the careers of fan-favorite actors, including Tom Selleck ("Blue Bloods") and Mark Harmon, who remains one of the biggest stars in television, starring in the network's "NCIS."

A hidden jewel in the acquisition is TVGuide.com website. CBS, through earlier acquisitions, owns TV.com website and it has Clicker.TV, an ambitious start to an interactive television program guide and entertainment site. CBS likely plans to roll up all of its programming guide assets to really own the space.

ALSO:

CBS acquires 50% of TV Guide Network for $100 million

CBS in talks to acquire half of TV Guide Network

Al Jazeera completes deal to buy Current TV

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