NBC, Bravo May Be Near Deal

NBC is close to a deal to buy the Bravo cable channel from Cablevision Systems Corp. for $1.25 billion in cash and stock, according to people close to the negotiations. The two parties were hours away from signing a deal late Sunday night after weeks of talks, the sources said.

The transaction, which sources cautioned could unravel, would give NBC, which is owned by General Electric Co., its first general entertainment cable channel and an outlet for televising shows that appear on its broadcast network.

NBC’s rival broadcasters already own such cable channels, allowing them to spread the high costs of prime-time television production across several outlets.

Last year, Walt Disney Co. bought what is now known as the ABC Family Channel from News Corp. for more than $5.2 billion and is repeating shows from the ABC broadcast network on the new channel. Fox owns FX, while CBS parent Viacom Inc. owns TNT, which has increased its ratings this year as a result of airing the CBS hit, “CSI: Crime Scene Investigation.”

For Cablevision, the deal would unwind a long-standing partnership with NBC and would help the Bethpage, N.Y.-based cable company, the nation’s seventh-largest, close a $500-million funding gap in its business plan.

NBC owns about 25% of Rainbow Media Holdings, the programming arm of Cablevision that includes nationally distributed cable channels Bravo, American Movie Classics, the Independent Film Channel and WE: Women’s Entertainment.

The partnership between NBC and Cablevision soured last summer amid a shareholder revolt against the cable company. Investors, including NBC, were irate after Cablevision agreed to buy back control of Rainbow Media Holdings for $8 a share just months after spinning off the cable programming arm to the public at about $30 a share.

Analysts speculated that Cablevision was positioning itself to sell some of the Rainbow assets to raise cash.

Cablevision was one of the hardest-hit cable stocks this year, pummeled by the general market downturn as well as the bankruptcy filing of rival Adelphia Communications Corp., the nation’s sixth-largest cable provider.

Under the deal with NBC, Cablevision would receive about $1 billion in GE stock for its 80% of Bravo. In exchange, NBC would give up its stake in Rainbow. On Friday, Cablevision shares closed up 53 cents at $10.09 on the New York Stock Exchange. The stock has lost about 70% in the last year. GE shares closed at $26 on the NYSE.

Metro-Goldwyn-Mayer Inc., which bought a 20% stake in Cablevision’s four national cable networks nearly two years ago for $825 million, would receive $250 million in cash from NBC for its Bravo interests.

Cablevision founder Charles Dolan sold MGM the stake after an auction of the four channels failed to garner his $4-billion asking price. NBC was among the bidders, offering about $3.9 billion for the four channels.

Analysts say that NBC is paying a premium for Bravo, although the multiple is not as high as that paid by Disney for the Family Channel. In a recent report, Merrill Lynch valued Bravo at more than $750 million.

Sources say Cablevision also has received bids in the last month for its American Movie Classics network. Both Viacom and MGM made offers, these sources say, but they fall short of Dolan’s $3-billion asking price.

For NBC, Bravo is its third major cable network. The company already owns business news network CNBC and the MSNBC news joint venture with Microsoft Corp.

Bravo is NBC’s second major acquisition. The company bought Spanish-language broadcaster Telemundo last year.