Fox Could Swap Stake in Golf with Comcast

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Fox Cable Networks Group is negotiating with Comcast Corp. for its stake in Speedvision/Outdoor Life Network, and considering whether to trade its interest in The Golf Channel for the MSO's 15 percent share of the motorsports programmer.

Comcast is the last piece Fox Cable needs to acquire Speedvision/OLN. The networks' other partners — Cox Communications Inc., AT&T Corp., the estate of cable legend Bill Daniels and Speedvision/OLN founder and president Roger Werner — put their shares in Speedvision or both networks to Fox on March 24. Fox Cable already owns 34 percent of the company.

Sources confirmed that negotiations with Comcast are ongoing, but there is no indication that Fox and Comcast will imminently reach a deal.

"These things have a habit of dragging on," a source close to the negotiations said.

All Werner would say last week was: "I'm very proud of what the employees here have done. Going from a clean sheet of paper to a $1.5 billion business is quite an achievement."

Comcast has been particularly high on The Golf Channel, which is available in about 37 million homes, and offers 24-hour links programming, including instruction; news and highlights; replays of classic major tournaments; and match play events; and live tournament coverage.

In February 2000, Comcast exercised its call option to increase its stake in the network from 40 percent to 60.5 percent. Fox controls 30.9 percent of the network and Times Mirror Inc. owns 8.6 percent.

According to a source familiar with Speedvision, Fox has until June 30 to hammer out a deal with its partners in Speedvision/OLN. Currently, each party is in the process of hiring investment bankers to value the networks.

According to sources, if the valuations come within 10 percent of each other, then the sale price would be an average of the two figures. If those appraisals are farther apart, then the parties would have to go back to the negotiating table to reach a deal.

So far, Fox believes the combined networks are worth about $1 billion. Sources said that the last two annual valuations of Speedvision/OLN valued the company at between $1.4 billion and $1.6 billion.

Fox has been interested in Speedvision ever since it landed the rights to carry National Association of Stock Car Racing (NASCAR) programming in 1999. Fox hopes to use Speedvision as a primary outlet for NASCAR fare.

According to a source close to the negotiations, if Fox is able to get 100 percent of Speedvision, it is unlikely to rebrand the network as a NASCAR channel right away. But that same source said there is nothing stopping Fox from creating a NASCAR-branded channel a couple of years down the road.

That delay could stem from existing programming contracts Speedvision has with other entities, including Formula One and Championship Auto Racing Teams (CART). Typically, Speedvision's programming contracts run for three to five years.

While NASCAR ratings have increased significantly under Fox, the network has found it difficult to sell advertising during the programming. Although the sport is popular among fans, marketers have other NASCAR avenues than advertising. They can sponsor cars, races or individual tracks.

But Speedvision has seen its advertising revenue climb significantly — up an average of 40 percent to 50 percent each year since its founding in 1996 — and shows no signs of slowing down. With NASCAR programming, Speedvision's ad growth presumably would be even higher.

According to Nielsen Media Research, Speedvision is available in 39 million homes, although the network claims 41 million. Outdoor Life is available in about 36 million homes.

Both networks, sources said, are profitable, with annual revenue of about $150 million and cash flow in the $40 million range.

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