CBS's Next Move? A Push Into Cable
The deal is small, but it has potentially big implications for CBS.
No price tag was announced but sources said it was in the ballpark of $100 million to $120 million dollars.
However, it gives CBS an entertainment network—a place to potentially distribute its shows and showcase its entertainment expertise. It also expands CBS' footprint into the lucrative cable space.
TV Guide has the benefit of broad distribution—it's in more than 80 million homes. If CBS can work with Lionsgate to make it more popular, the two companies will be able to charge cable and satellite TV companies higher distribution fees. Bottom line: There's potential for significant upside.
Lionsgate and CBS shares both moved marginally higher in after-hours trading. But the deal won't have a huge impact on the bottom line of either company, and was largely priced into the stocks, since it was first reported late last week.
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Analysts are bullish on the move.
David Miller at Caris & Co. said, "[It's] a perfect strategic move by both companies." Miller pointed to the fact that TVGN's ratings are so low, it will benefit from a turnaround. Evercore's Alan Gould also said that the struggling network will benefit from CBS's experience in the entertainment space.
The big question now: Can CBS and Lionsgate turn TV Guide Network into a true destination for entertainment content, and help it shed its reputation as a literally TV guide, in an era when DVRs have made its traditional functionality obsolete?
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—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin