LOS ANGELES (AP) — Analysts on Monday praised a reported deal for CBS Corp. to buy up to a 50 percent stake in the TV Guide Network, which it would co-own with Lions Gate Entertainment Corp.
On Friday, Hollywood blog Deadline.com reported that CBS will pay slightly less than $123 million for a 49 percent stake in the network from JP Morgan's One Equity Partners with an option to increase its stake by 1 percent.
Spokesmen for Lions Gate didn't immediately return messages seeking comment. CBS and One Equity declined to comment.
Lions Gate bought TV Guide Network and TVGuide.com in February 2009 for about $250 million from TV listings firm Rovi Corp. Lions Gate then sold a 49 percent stake in the company to One Equity for about $123 million in May 2009.
CBS's reported purchase price means it is paying no more than One Equity did four years ago.
Alan Gould, an analyst with Evercore Partners, said that TV Guide Network, which is available in 80 million homes, will benefit from CBS's expertise as an operator.
Previously the channel offered basic program listings with some video, but in the last few years it has dropped the scrolling guide completely for most of its subscribers.
Gould said that could mean the channel will become a home for older CBS and Lions Gate content. The channel currently shows reruns of programs like "Who's The Boss," ''Ugly Betty" and older movies.
The two companies already work together with Lions Gate's shows "Weeds" and "Nurse Jackie" running on CBS's premium pay TV network Showtime.
"Between the combined libraries and programming abilities of both CBS and (Lions Gate), this could lead to a complete transformation of TVGN," Gould wrote in a research report Monday.
Caris & Co. analyst David Miller called the acquisition "a perfect strategic move by both companies." He noted that TV Guide Network has very low audience ratings as measured by The Nielsen Co. and could benefit from a turnaround.
"Once the scroll is removed from the bottom third of the visual, as will be the case by the end of calendar Q3, the (joint venture) should be able to very quickly triple, possibly even quadruple, that rating through brand new programming," he wrote in a research note Monday.
Lions Gate shares rose 42 cents to $22.74 in afternoon trading. CBS shares fell 59 cents to $45.39.