What Will CBS Do With TVGN? Expect New Competition in Celebrity News
By Jeanine Poggi
CBS's new stake in the TVGN basic cable channel could result in a TV network wholly devoted to celebrity gossip, style and red carpet coverage.
CBS Corp. and co-owner Lionsgate said this week that they will introduce a new brand and programming strategy for the channel, until recently called the TV Guide Network, but that it will continue its current focus on entertainment. But the assets and ambitions of each owner suggest noticeable changes are in store.
TVGN could become a network dedicated to celebrity news and women's fashion, according to David Miller, senior media and advertising analyst at B. Riley & Co. It could get pumped up into an "ESPN for celebrity gossip," he said.
TVGN, originally a TV listing service, is already taking that approach with original shows like "Hollywood 411," "Celebrity Says" and "Reality Chat." But much of the network's current lineup is also devoted to repeats of shows such as "Who's the Boss?" The new ownership team could increasingly supplant that fare from CBS Corp.'s portfolio of syndicated series such as "Entertainment Tonight," "Inside Edition" and "OMG Insider."
That would make TVGN a more direct competitor to channels such as E! and Style Network, both of which are owned by NBCUniversal.
With TVGN, CBS Corp. gets its first ad-supported cable network. This could come in handy, allowing CBS to direct viewers from its broadcast channel to a secondary platform during major events. Aside from its successful broadcast network, the company currently holds the premium cable network Showtime; CBS Sports, which may cable and satellite distributors have placed on a sports tier; and a stake in The CW broadcast network.
TVGN, of course, also represents another platform for CBS's vast portfolio of content. "This is a strategic way for CBS to use its content brands and gain access to a highly distributed basic cable network that has a lot of upside," CBS Corp. CEO Leslie Moonves said in the statement announcing his company's purchase of a 50% stake. "Lionsgate, led by my friend Jon Feltheimer, is a forward-thinking content company and a great partner for us here. We're excited to bring CBS's programming and production assets to the venture, and work with Lionsgate to rebrand and grow a channel that will be increasingly valuable to our carriage partners."
Earlier this month, Mr. Moonves was asked at a Deutsche Bank conference about the possibility of a CBS II cable network. "Would we like a general entertainment cable network?" he said in response. "Sure we would. I've said that before. Do I think we could run it extremely well? Of course we could. We have a great deal of production. We have a great deal of expertise in that. Could CBS II be far more effective than a number of cable channels that are currently out there now? Absolutely. But I think the last thing the cable operators want is another general entertainment channel from us."
Ultimately, TVGN, which is currently in over 80 million homes, may be more interesting as a financial play for CBS Corp. than as a significant hub for new content, said David Bank, analyst at RBC Capital Markets. While the financial terms of the deal, which also included a stake in TVGuide.com, were not disclosed, reports have estimated that it cost CBS about $100 million. That is essentially chump change for CBS, which has more than $700 million in cash and cash equivalents on its balance sheet. To put the $100 million in perspective, Mr. Moonves made just shy of $70 million alone in 2011.
"This is low-risk; it's financially shrewd," Mr. Bank said. "They didn't go out and buy AMC or Hallmark Channel for billions of dollars. They spent just $100 million and now have a chip in the game."
While Mr. Bank doesn't see tremendous opportunity on the advertising side, there is potential for CBS Corp. to increase the affiliate fees it collects from cable and satellite companies -- using their need to carry the CBS broadcast network to squeeze higher payments from them for TVGN. "CBS can use its leverage in affiliate negotiations to drive subscriber revenue without a whole lot of cost," he said.