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A+E Networks Worth $20B — and Its Value Is Growing

7/16/2012 12:01 AM Eastern

The sale of NBC Universal’s 15% stake in A+E Networks
has vaulted the amalgamation of arts and information
channels into the top tier of cable-programming networks,
with a valuation of about $20 billion, and could
set the stage for a further consolidation of the services,
according to one analyst.

NBCU, which includes cable channels CNBC,
MSNBC, Bravo and Oxygen in its stable, agreed last Tuesday
to sell the A+E Networks stake to partners The Walt
Disney Co. and Hearst
Communications for
$3.025 billion. At that
price, A+E Networks is
valued at about $20.2
billion, making it the
eighth-largest cable
network group in the country, behind Discovery Communications
but worth more than double Scripps Networks.

Pivotal Research Group media anlayst Brian Wieser said
in an interview last week that the deal could eventually
lead to either Disney buying out 50-50 partner Hearst and
taking A&E in-house, or spinning off the networks in an
independent company, ala Discovery Communications.

“Either is possible,” Wieser said in an interview last
week, adding that it could be more than a year before
any such scenario would take place. “If you look at Disney,
it actually could really help.”

While Disney sits at the top of the rankings of media
content companies, its cable presence is limited to sports
juggernaut ESPN, the ad-free Disney Channel and ABC
Family. Adding a stable of established networks like A&E
could help strengthen its cable offerings.

The relationship with Disney and its broadcast stations
could also be a boost for A+E Networks, Wieser
said. Disney owns and operates about eight ABC broadcast
stations across the country, in markets like Los Angeles,
San Francisco, New York and Chicago.

Overall, A+E Networks reaches more than 300 million
homes in 150 countries in 35 languages worldwide.

Just what NBCU will do with the proceeds of the deal
remains to be seen, although it could go towards buying
out its partner in NBCU, General Electric. As part
of the deal that gave Comcast a 51% stake in NBCU in
2011, GE can sell half its 49% interest in the joint venture
to Comcast in 2014, and the rest in 2018. Wells Fargo
media analyst Marci Ryvicker has estimated the cost
of the 2014 transaction could be between $7 billion and
$8 billion.

TAKEAWAY

A+E Networks’ rating strength
may have been one of the
driving factors in the
increase in value for
the programmer.

September