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CBS's Next Move? A Push Into Cable

Signage is displayed on the CBS Corp. Television City building in Los Angeles, California, U.S.
Jonathan Alcorn | Bloomberg | Getty Images
Signage is displayed on the CBS Corp. Television City building in Los Angeles, California, U.S.

CBS announced on Tuesday it is buying a 50 percent stake in TV Guide Network from One Equity Partners, entering into a joint venture with Lionsgate to run the basic cable channel and website.

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.

(Read More: CBS' Moonves Talks 'Transformation' With Digital and Ad Growth)

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.

(Read More: What Streaming Media Means for Cable's Future)

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

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.