TV Guide channel a bargain

Investor Allen Shapiro and a private equity arm of JPMorgan Chase & Co. on Thursday scooped up the TV Guide cable channel and the TV Guide website for a bargain-basement price of $255 million.

The sale of the channel, for about $3 per cable subscriber, sets “a new record low for a network of this size,” said Derek Baine, a cable analyst with SNL Kagan.

“It’s surprising that it went for so little,” Baine said. “But there is a lot of fear out there right now. People don’t know how long the recession will last, or how bad the advertising market will get.”

Macrovision Solutions Corp., a Santa Clara technology company, had been trying to unload its TV Guide media properties since May, when it acquired them as part of its $2.8-billion purchase of Gemstar-TV Guide International. Macrovision bought Gemstar for its interactive programming guide, which it licenses to local cable companies.

Two months ago, Macrovision sold TV Guide magazine, the formerly pocket-size weekly digest of TV-show news and listings that once was the largest-circulation magazine in the country, to a Beverly Hills investment firm -- for $1.

“We are a technology company and we were buying Gemstar for the technology,” said Corey Ferengul, executive vice president for marketing at Macrovision.

Despite its being available in 83 million homes, previous owners of the TV Guide channel -- which have included Rupert Murdoch’s News Corp. -- failed to capitalize on the famous brand name and ceded the television entertainment news business to cable networks such as E! Entertainment and shows such as “Entertainment Tonight” and “Access Hollywood.”

In an interview, Shapiro said that the Hollywood-based TV Guide channel and the website, which has about 15 million unique visitors a month, are “tremendous assets for growth.” The new owners, he said, eventually will broaden the channel’s programming, which is now a hybrid of entertainment news and vignettes along with a scrolling grid of shows.

Shapiro is backed by One Equity Partners, which manages $8 billion in investments for JPMorgan Chase. A spokeswoman said it was the firm’s first investment in a cable channel.

The sale is expected to close in April. Macrovision could earn an additional $45 million above the sale price for the cable channel and the website if certain financial benchmarks are reached by the new owners during the next three years.

Initially, Macrovision figured it would sell the media assets for $350 million to $550 million. But the credit markets dried up and buyers became scarce.

“The amount that Macrovision was expecting kept creeping down,” said Kerry Rice, an analyst with Wedbush Morgan Securities, who followed the auction.

Macrovision still is trying to sell its remaining media asset, the horse-racing TVG cable channel. Rice estimated that it should fetch about $75 million.

However, that price and the one garnered by the TV Guide channel is in contrast to the $3.5-billion sale in September of the Weather Channel and its website to NBC Universal and the private equity funds Blackstone Group and Bain Capital.

The challenge for the new owners, according to Wedbush’s Rice, will be to persuade cable companies to pay more to carry the channel, particularly as more customers sign up for digital service.

“The hurdle for Allen Shapiro will be to make this a relevant network,” Rice said.

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meg.james@latimes.com