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Murdoch sharing control of TV Guide with TCI in $2 billion deal ERIC R. QUINONES, AP Business Writer |
Thursday, June 11, 1998
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(06-11) 10:48 EDT NEW YORK (AP) -- Rupert Murdoch's News Corp. is giving up full control of TV Guide, selling a majority stake in the nation's best-selling weekly magazine for $2 billion to a cable channel guide operator controlled by Tele-Communications Inc. Under the deal announced today, United Video Satellite Group Inc. plans to use the vaunted TV Guide name for the Prevue Channel, its on-screen channel listing service seen in more than 50 million U.S. cable homes. United Video will own TV Guide, and News Corp. will get a 48 percent voting stake in the company in return. Cable giant TCI also will have a 48 percent voting stake in United Video, with the public controlling the rest. In addition to changing ownership of one of the best-known brand names in publishing, the deal marks further cooperation between two of the nation's most powerful media moguls, Murdoch and TCI chief John Malone. TCI and News Corp. are partners in Fox Sports Net, the cable sports network launched last year to take on ESPN. News Corp. also agreed last year to merge its satellite broadcasting operations with Primestar, a satellite company controlled by TCI and other major cable companies. The Justice Department is trying to block that deal on anti-competitive grounds. News Corp. will receive $800 million in cash and $1.2 billion in United Video stock in exchange for its TV Guide properties, which include an entertainment Internet site and a cable guide publisher, TVSM. Outside the United States, the Prevue Channel reaches 3 million homes in more than 20 countries. TCI will own 44 percent of United Video's common stock after the deal is completed, while News Corp. will own 40 percent and the remaining 16 percent will be publicly owned. Certain shares carry more voting power. The cash could be used for another acquisition for Murdoch's empire, which includes the Fox network and studio, HarperCollins books and newspapers like the New York Post. News Corp. has been expanding its sports holdings rapidly -- capped by the purchase this year of the Los Angeles Dodgers -- but a spokesman said there are no particular plans for the proceeds from the TV Guide deal. With the deal, Murdoch will get back about what he paid for TV Guide a decade ago, while holding onto a significant ownership stake. Murdoch bought TV Guide, along with Seventeen magazine and the Daily Racing Form, for $3 billion in 1988 from Walter Annenberg, who founded it in 1952. Murdoch sold Seventeen, the Daily Racing Form and other magazines three years later for $650 million. TV Guide has been the jewel of News Corp.'s magazines and inserts business, which contributes about $1.2 billion, or 11 percent, of the company's annual revenue. It has circulation of about 13 million, making it the best-selling U.S. weekly and the second-largest consumer magazine in the world behind Reader's Digest. News Corp. shares were up $1.06 ¼ at $24.62 1/2 in morning trading on the New York Stock Exchange. United Video shares rose $1.12 1/2 to $38.12 1/2 on the Nasdaq Stock Market, while TCI Group was down 56 ¼ cents at $33.75.
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