Oxygen May Be Smart Buy For NBCU

Is NBC Universal pursuing the Oxygen cable network? Or is this just another in a long series of attempts by Oxygen to get sold?

A telling sign might have been found a couple of days ago, before a report surfaced that NBC was considering buying the mid-size network, say business analysts. The tipoff? When Oxygen--the privately owned, 73-million-subscriber young women's channel--did its first eBay auction deal, grabbing a new Oxygen advertiser: Intel.

Some small- to mid-size cable networks now view the eBay auction system as a way to grow their limited list of national advertisers. But the eBay plan isn't something that benefits most established and bigger cable networks, which have virtually shunned the system.

For Oxygen, the eBay deal "is a sign that it's having financial difficulties," says Hal Vogel, CEO of Vogel Capital Management.

It's no secret that for years, Oxygen--as well as another independent cable network, Hallmark Channel--has almost openly pursued deals to sell itself to bigger entities, such as NBC Universal, CBS Corp., Viacom, Time Warner or Walt Disney.

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Independent cable networks realized they need clout in all areas of business--advertisers, programmers, and producers--to compete in the ever-larger world of growing media conglomerates.

"Marketing alone can be very expensive [for independent cable networks]," said Vogel. Packaging it with other cable channels, Oxygen could get savings in terms of administration and back-office operations--as well as programming efforts.

Few cable networks can stand alone as marketers look for increasing big media-buying deals and "360 degree" marketing plans that require a wide range of platforms across specific targeted demographics.

At press time, an NBC spokesman had no comment, while an Oxygen representative didn't return messages.

Back in June, at an investor conference in New York City, Jeff Gaspin, now president/COO of NBC Universal Television Group, said NBC would be open to buying more cable networks. That has provided the potential acquisitions offered a strategic fit with their existing stable and programming libraries.

Some industry estimates are that Oxygen is seeking a $1 billion to $1.5 billion payday or more. Hallmark attempted to drive a similar sale some years ago at around the same price point, but the high tag didn't attract any takers, say business analysts.

While the NBC network has stumbled in recent years, NBC Universal's cable portfolio--particularly in the entertainment area with USA Network, Sci-Fi Channel and Bravo--have been growth drivers.

The report about the potential sale of Oxygen to NBC Universal ran in The Hollywood Reporter.

A sale of Oxygen to NBC Universal would make sense and work well with its $600 million March 2006 acquisition of iVillage. Analysts believe that it would also fit with NBC's ever-increasing women-targeted morning news and lifestyle programming that the expanded "Today" show brings.

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