Disney, Hearst, NBC strike complex deal to simplify cable ownership
Walt Disney Co., General Electric Co.'s NBC Universal and Hearst Corp. have finalized an agreement to merge several cable networks together, for now anyway.
Under the terms of the agreement, A&E Television Networks (AETN), which is owned by all three companies, will acquire Lifetime Entertainment Services, which is owned by Disney and Hearst. The channels that will now make up A&E Television Networks are A&E, History Channel, Lifetime Television, Biography and a handful of smaller networks.
Although the deal is being positioned as joining the three companies together, ultimately it is part of an ongoing process to reduce and eventually eliminate NBC Universal's stake in the entity. When the deal is completed, Disney and Hearst will each own 42.5%, and NBC Universal will have a 15% stake. The companies said there are "mechanisms" that could require NBC Universal to exit the partnership no later than 15 years and quite possibly sooner.
For NBC, which only had a 25% in AETN prior to the merger, the deal makes sense because it will be part of a bigger more valuable entity, even if its piece is smaller. The company still has a strong group of cable networks of its own with USA, Syfy, Bravo and MSNBC among others.
Abbe Raven, president and chief executive of AETN, will oversee the new entity, and Andrea Wong, the high-profile CEO of Lifetime, will report to her. There will likely be layoffs once the deal is completed. The companies said the combination is expected to "yield substantial cost efficiencies."
-- Joe Flint