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Cable Operators

Carriage Part of E! Talks

3/17/2006 7:00 PM Eastern

Comcast Corp. and The Walt Disney Co. continue to discuss unwinding their E! Entertainment Television partnership, but executives familiar with both companies don’t think a deal would happen soon.

Comcast, which owns about 60% of E!, has been interested in acquiring Disney’s 40% stake in the network for years, but the two parties haven’t been able to agree to terms. Executives familiar with both companies said these E! talks have been ongoing for the past six months and are taking place alongside carriage negotiations for Disney’s ABC broadcast network and its cable channels ESPN, Disney Channel and ABC Family. But those same executives said the carriage negotiations weren’t pegged to an E! deal getting done. Recent talks were reported first by Broadcasting & Cable.

“Any resolution [concerning E!] would happen in weeks or months, not days,” an executive familiar with the negotiations said. “There is nothing imminently forthcoming.”

Comcast has been interested in consolidating E! for years, but has been unable to reach an agreement with Disney. Whether that situation has changed remains to be seen.

Comcast programming president Jeff Shell, in an interview, declined to comment on any talks. “The only thing I will say about that is we love E!. We like where it is. We like where it’s going and I think [chief financial officer] Tom Staggs at Disney was on record as saying that they didn’t view it as a strategic asset. But other than that, I can’t confirm it, and timing, I don’t know.”

The E! partnership was formed back in 1997, with Comcast initially 50.5%, Liberty Media Corp. holding 10% and Disney 39.5%. Comcast later acquired Liberty’s stake.

UBS Warburg cable debt and equity analyst Aryeh Bourkoff said better carriage terms for the Disney networks are a possible incentive for Comcast to get a deal done, but he said Comcast wasn’t likely to pay more for the networks just to get Disney’s E! stake.

Disney does have one other card to play, though, and it speaks to the complications inherent in new programming-distribution deals.

“I think the negotiations over the networks overall will be tied into trying to introduce mobility into the contracts, in the sense of will Comcast be able to use content from ESPN on other devices like its Sprint [wireless] partnerships,” Bourkoff said. “Part of the intricacies of the discussions between Comcast and Disney are trying to introduce the concept of mobility for the Disney content among different Comcast devices.”

Merrill Lynch & Co. media analyst Jessica Reif Cohen values E! at about $2.5 billion, making Disney’s 39.5% worth about $1 billion.

Moss contributed to this report.

 

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