Oxygen in air at NBC Uni

Analysts say indie cabler could fetch $1.5 bil

NBC Universal might be about to breathe some fresh air into Oxygen.

One of cable television's last remaining indie channels is shopping itself to General Electric's entertainment unit, which purportedly has been mulling a play for the female-targeted property since talks quietly began in June, multiple sources said.

While a recent estimate from research firm SNL Kagan pegged the value of Oxygen at more than $1 billion, the consensus among several analysts reached for comment was that it could fetch as much as $1.5 billion.

But Oxygen's owners, a private group that includes Oprah Winfrey, Paul Allen and chairman and CEO Geraldine Laybourne, are aspiring to what one insider dubbed "BET money," a reference to the $3 billion Viacom shelled out for BET in 2000.

A spokeswoman for Oxygen declined comment on any potential sale but indicated that the company is assessing its future.

"We're always evaluating options to maximize value for our shareholders, including private equity and strategic partners," she said.

A spokesman for NBC Uni declined comment.

If NBC Uni acquires Oxygen, it would be its biggest purchase since snapping up iVillage in March 2006 for $600 million. With its portfolio of female-friendly Web sites like Healthology.com, iVillage would be easily integrated into those of Oxygen — a key incentive for NBC Uni, which could be looking to justify an acquisition that has been criticized as overpriced and underutilized.

Oxygen also would fit nicely with NBC Uni's growing sweet spot among females 18-49, who flock to NBC's morning powerhouse "Today," cable channel Bravo and iVillage. Madison Avenue increasingly makes multiplatform purchases to attract key demographics, and Oxygen would be another place to aggregate young women.

Although NBC Uni is said to be only in the tire-kicking stage at this juncture, the acquisition makes sense for both parties. NBC Uni's robust cable unit, which includes USA Network, Sci Fi Channel and CNBC, has helped offset lagging returns on the broadcast side of GE's media division. Oxygen, which, like many indies, struggles with operational costs, could take advantage of economies of scale, including combining affiliate sales and other back-office functions.

A source noted that Oxygen's owners even have an NBC Uni exec in mind to lead the network: Lauren Zalaznick, president of Bravo Media. It's not uncommon for an exec to manage more than one brand at NBC Uni, with Bonnie Hammer currently presiding over both USA and Sci Fi.

Laybourne led the emergence of Nickelodeon and is credited with growing the network significantly from a fledgling network into a profitable megabrand.

Laybourne went about recruiting high-profile partners in her new venture — including Marcy Carsey, Tom Werner and Caryn Mandabach, principals of former indie TV powerhouse Carsey-Werner-Mandabach — and launched the network in 2000 with $500 million in funding. The idea behind Oxygen was to target younger women and to incorporate the Internet as a significant part of its strategy to reach viewers.

But in its eight years on the air, Oxygen has never quite settled into a niche opposite other, bigger cable ventures like Lifetime that target women. Moreover, its early Internet focus faltered, though the network has recently re-entered the space with a growing suite of dot-com domains including social networking site Oomph.net.

NBC Uni also could potentially elect to take a stake in the network as opposed to owning it outright, as it has done with a few other cable players including A&E and Sundance Channel.

The sale of Oxygen would be just the latest in a string of independents that have put themselves on the block in recent years. E.W. Scripps Co. successfully integrated music channel Great American Country in 2004, while others have stumbled, including Crown Media, which unsuccessfully tried to unload Hallmark Channel last year.

Allen, an Oxygen stakeholder who this week sold 10 million shares of DreamWorks Animation SKG, knows the perils of cable independence. He sold channel Tech TV to Comcast Corp. in 2002 for $300 million after investing about $450 million in the venture.

As with Hallmark, sales talk for Oxygen coincided with hitting the benchmarks for a fully distributed network, exceeding 70 million homes and projected to reach $200 million in revenue this year. The network commands a license fee of 9 cents per sub per month, according to SNL Kagan, and will spend $88 million on original programming in 2007.

Oxygen's original programming efforts include reality series "The Janice Dickinson Modeling Agency," which returns for a third season in December, and "Tori & Dean: Inn Love," which will have its second-season premiere Tuesday. However, the network has never been able to create the kind of water-cooler show that can catapult a cabler into the public consciousness.

Winfrey is on Oxygen's lineup with "Oprah After the Show." Also on the schedule are acquired sitcoms including "Ellen," "Mad About You" and "Roseanne" along with second runs of talkers "The Tyra Banks Show" and "The Ellen DeGeneres Show."

Georg Szalai in New York and Nellie Andreeva in Los Angeles contributed to this report.
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