The soon-to-be-new owner of TV Guide Network said that the $300 million purchase, made public on Thursday, will be just the first in a series of programming investments he and his private equity partners, One Equity Partners, plan to make in the future.
“This will absolutely be the starting point,” said longtime media executive Allen Shapiro (left), who agreed to purchase TV Guide Network along with One Equity on Thursday.
Shapiro would not tip his nor his partners hand as to what they have their eyes on, but added that it would be in the media space. And with One Equity being the private equity arm of investment banking giant J.P. Morgan , Shapiro believes he has deep enough pockets to make deals.
“We have plans for additional acquisitions,” Shapiro said.
In the meantime, Shapiro, who has served as president of Mosaic Media Group and as CEO of Dick Clark Productions—where he served as executive producer of So You Think You Can Dance? The Golden Globes, American Music Awards, Academy of Country Music Awards and New Years Rockin’ Eve—will focus on TV Guide Network.
Shapiro said that he and his partners will invest heavily in programming at the network.
“We will spend substantially more for programming than is currently being spent,” Shapiro said, adding that more details will be released after the company officially takes control of the channel. “I’m in the entertainment business and I think Macrovision, as they represent themselves, are in the patent and systems business. So we will be much more supportive of programming.”
Shapiro also envisioned a time when the scrolling channel guide, long a staple of the network—and for a period in the early days of cable, its only reason for existence—will disappear.
The guide, literally a scrolling grid at the bottom of the screen, has increasingly lost its relevance as cable operators have moved their subscribers to digital tiers. That has also been true of TV Guide Network, which has been moved to digital tiers on some cable systems.
“Clearly over time as we go to digital, the guide will be less important and be in less and less homes,” Shapiro said. “You will be able to think of this more as a full service entertainment network and a programming network as opposed to a utility network. Our plan is to expand on that.”
TV Guide, under the stewardship of president Ryan O’Hara, has made moves in revamping its programming lineup to a mix of celebrity-oriented shows like Hollywood 411 and TV Watercooler, to reruns of American Idol—American Idol Rewind.
“We plan to build on what they have now,” Shapiro said. “There are a number of opportunities available to us; we have some exciting options. Once we close we will make those all available. Right now the most important thing is that in a challenging time, we managed to complete a transaction.”
O’Hara said that the network has transformed itself from being a guide network to an entertainment network with guidance capabilities.
“We’re in the middle of that progression and I think there is still a lot of growth to be had; a lot of value to still contribute to cable operators and to viewers as we evolve the network,” O’Hara said.
O’Hara (right), who said that he would be open to staying on with the channel, said the priority now is to ensure a smooth transition to the new ownership.
“We’re certainly having those discussions,” O’Hara said.
Macrovision Solutions bought TV Guide Network parent Gemstar-TV Guide International in May for about $2.8 billion in cash and stock and put the network on the block shortly after closing that deal. In October it sold TV Guide magazine to venture capital firm OpenGate Capital for $1 in cash and the assumption of debt.
In the Gemstar deal, Macrovision valued TV Guide Network at about $408 million. At the time some analysts had placed a price as high as $1 billion on the channel, which has full carriage in about 83 million homes. But as valuations have plummeted in the wake of the stock market meltdown and the overall economic downturn, the price tag on the network has dropped precipitously.
April Horace, an analyst at Janco Partners, had valued TV Guide Network at about $426 million back in the summer. Horace followed Gemstar but does not currently cover Macrovision.
“All the media multiples have collapsed,” Horace said.
According to the deal, Macrovision will receive $255 million in cash and could receive as much as $45 million in additional earn-out provisions through 2012. The deal is scheduled to close on or before April 1.
TV Guide is the 19th largest cable network in the country with about 83 million subscribers.