Fox Cable Networks Group has reached a deal that will allow it to buy out its partners in Speedvision for what it considers a used-car-type price.
Fox and Comcast Corp. last week announced a series of transactions through which Fox would sell its stakes in The Golf Channel and Speedvision's sister service, Outdoor Life Network, to the MSO. In return, Fox Cable would receive Comcast's 15-percent equity in Speedvision.
Sources familiar with the negotiations said Comcast would buy Fox's 30.9-percent interest in the Golf Channel for $365 million. The OLN stake, observers said, could be worth between $700 million and $850 million.
That gets Fox $1.1 billion to $1.2 billion in cash — about enough to cover the cost of buying out the other owners of Speedvision/OLN.
When the dust clears, Fox figures it's getting a network for about $140 million. That includes the $90 million Fox paid for 34 percent of Speedvision in 1998, and $50 million Fox paid for a Golf Channel stake in 1996.
And Comcast enhances its programming stable, which already includes E! Entertainment Television (39.7 percent); Style (39.7 percent); Comcast SportsNet in Philadelphia (53.1 percent); QVC (57 percent); CN8 — The Comcast Network (100 percent); Comcast SportsNet Southeast (72.4 percent), The Sunshine Network (15.6 percent); In Demand (11.1 percent); and Home Team Sports (100 percent).
"What we're really excited about is the opportunity to increase our content portfolio," Comcast spokeswoman Karen Buchholz said, adding that the deals are expected to close by the second or third quarter of this year.
first reported Fox Cable's designs on total control of Speedvision on April 16.
Fox has been angling for control of Speedvision since March, when the network's other partners — AT&T Corp., Cox Communications Inc., the estate of cable pioneer Bill Daniels and Speedvision founder and president Roger Werner — agreed to "put" their interests in Speedvision/OLN to Fox.
Each of the other partners has hired an investment banker to value their respective stakes in Speedvision/OLN, and a deal could be wrapped up by July.
"The deal makes a lot of sense," Janco Partners Inc. cable analyst Matthew Harrigan said. From the standpoint of News Corp., Fox's parent, Golf and Outdoor Life were peripheral assets. And Fox holds the rights to National Association of Stock Car Racing programming.
The deal also doesn't add to Fox Cable's debt at a time when News Corp. is focused on buying DirecTV Inc. parent Hughes Electronics Corp.
Fox Cable CEO Jeff Shell said plans for additional NASCAR programming on Speedvision were still in the works, with Fox Sports chairman David Hill "taking a real hard look at it."
While additional NASCAR programming will find its way onto Speedvision, Shell said, that will not come at the expense of its popular existing features.
"The goal will be to retain everything that has worked for the channel so far," Shell said. "There's a lot of very strong programming with hardcore passionate fans, whether its motocross or F-1 [Formula One racing], those things will absolutely stay."
Shell said that a possible relaunch or rebranding of the network also could be in the cards. "That's what David [Hill] is looking at right now," he said.
Comcast receives 92 percent of the Golf Channel and 100 percent of Outdoor Life, which are available in 37 million and 36 million homes, respectively.
Comcast has been particularly high on The Golf Channel, which 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.
Comcast spokeswoman Buchholz said there were no immediate plans to change the Golf Channel or OLN at this time.
Golf Channel spokesman Dan Higgins said it was too early to determine what impact the deal will have on the service. But he hoped that Comcast's greater control would result in a boost in carriage.
"Nothing really changes," Higgins said. "The only difference is that Comcast has distribution, whereas Fox did not."
Having Comcast as a larger owner could also help in negotiating the rights to major tournaments, some observers said.
The Golf Channel currently offers early round Thursday and Friday coverage of major Professional Golfers Association tournaments, as well as lesser-known PGA tournaments that run opposite majors such as The Masters and the U.S. Open. The channel also offers 33 European tournament events; Australian, Asian and Canadian events; and early-round coverage of Ladies Professional Golfers Association tour events.
The major PGA tournaments are televised by the broadcast networks, whose contracts run through 2002. But the renewal of those contracts is being negotiated this summer, leading some to speculate that a deep-pocketed owner like Comcast may be able to acquire some additional major events.
"We love having PGA tournaments on the air," Higgins said. "We would love to have more, but that remains to be seen."
Speedvision is currently in about 39 million homes, a number that could go up significantly once Fox Cable begins adding more NASCAR programming to the network.
"Clearly with the amount of digital capacity being rolled out, that has to go up," Harrigan said. "That's a nice positive, long-term."