Family Channel Deal Proposed

News Corp. and Liberty Media Corp. are negotiating to buy International Family Entertainment in a deal that would value the owner of the Family Channel cable network at about $1 billion, according to Wall Street sources.

Under the proposal, the partners would take the publicly traded company private and reduce to 20% the stake held by the Robertson family, which now exerts control. Liberty would double its 20% stake; it and News Corp. would each own 40% of the private company.

None of the parties involved would comment.

Fox executives confirmed in late January that the company was in discussions with the Family Channel to become a home for the Fox Children’s Network, whose programming now appears during the day and on weekends on 179 Fox broadcast affiliates. News Corp. is Fox’s parent.

Several parties, including NBC, CBS and Universal Studios, have expressed interest in buying International Family Entertainment since it began shopping for a partner more than six months ago. But discussions broke down because Pat Robertson, the sometime presidential hopeful and the founder of the conservative Christian Coalition, has been unwilling to relinquish control of the company, which grew out of the Christian Broadcasting Network he founded.

According to sources, Liberty and News Corp. are proposing to pay about $21.50 a share for the company--a premium over the market price but far less than the $30 or more a share that some investors say the company would be likely to fetch at auction. The stock drifted up late last year on speculation of a takeover and closed Monday on the New York Stock Exchange at $18.125 a share, up 37.5 cents.

Mario Gabelli, whose mutual funds own 8 million of the 25 million shares of International Family Entertainment held by the public, estimates that the Family Channel’s cash flow of $100 million makes the network alone worth more than $22 a share. Cable networks have been fetching multiples of about 13 or 14 times cash flow. In addition to the Family Channel, International Family Entertainment owns Fit TV, a new fitness channel, and MTM Entertainment Inc.

Gabelli said that in the event of a shareholder lawsuit, the buyers would probably argue that the value of the network is diminished by a long-term contract that requires the Family Channel to air Pat Robertson’s “700 Club” religious show during the valuable prime-time block every weeknight.

The deal would further the connections between News Corp. and Liberty, the programming arm of the nation’s largest cable operator, Tele-Communications Inc. The two companies are already 50-50 partners in Fox Sports, which owns a collection of regional sports networks and is feeding sports programming to Fox’s fX cable channel.