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Lions Gate sells 49% of TV Guide Network for $123 million to investors it gazzumped

May 28, 2009 | 10:45 am

Lions Gate Entertainment, seeking to offset the costs of its $250-million acquisition of TV Guide Network and, has sold 49% of the venture to the same private equity group that earlier had attempted to buy the assets before Lions Gate emerged with a rival offer.



One Equity Partners, an investment unit of JP Morgan Chase & Co., will pay about $123 million in cash for the minority stake. It also retains the right to buy 1% more of the cable channel and website.


Proceeds from the sale will help bolster Lions Gate's balance sheet, which at the end of March showed just under $200 million in combined cash and available credit. Lions Gate could use the cash from the sale to continue building its core movie and TV business or buy fresh programming for the TV Guide channel, which desperately needs a makeover.


Or Lions Gate may have to use the money to fight a proxy war if activist shareholder Carl Icahn makes good on his veiled threat to mount one. Icahn, who owns 14.5% of the Santa Monica-based studio, has criticized Lions Gate chiefs Jon Feltheimer and Michael Burns for the company's high overhead and for overpaying for TV Guide.


In January, Lions Gate elbowed One Equity Partners and investor Allen Shapiro out of a deal the group had to purchase TV Guide from Macrovision Solutions Corp.


At the time, Macrovision, a Santa Clara-based technology company, said Lions Gate’s offer was superior because it could close sooner and wasn’t encumbered by other contingencies. Shapiro had said that he and One Equity Partners were blindsided by Lions Gate’s move but hinted the investors shouldn't be written out of the picture. 


“It remains to be seen if the final chapter is written yet,” he said.


As it turns out, Shapiro was right.


Shapiro said he and Feltheimer will steer the direction of the channel and attempt to transform it into a viable general entertainment network that will no longer be best known for its scrolling grid of TV  listings. Eventually, the channel will have a new name and new "focus," according to Shapiro.


— Claudia Eller