A&E Television to acquire Lifetime; NBC Universal may leave joint venture in 15 years

A&E Television to acquire Lifetime

LOS ANGELES — A&E Television Networks said Thursday it is acquiring Lifetime Entertainment Services, bringing the home of “Project Runway” into a stable of profitable channels that includes A&E and the History channel.

Terms of the deal, which is expected to be completed by the end of the year, were not disclosed.

A&E Television Networks is a joint venture between The Walt Disney Co., Hearst Corp. and General Electric Co.’s NBC Universal. Lifetime is already owned 50-50 by Disney and Hearst.

Under the terms of the deal, NBC Universal may elect or be required to exit the venture within 15 years, which would make Disney and Hearst 50-50 partners in the larger group.

The acquisition should result in cost savings by merging advertising sales forces and corporate overhead, and should be a positive for Disney shareholders, said David Joyce, an analyst with Miller Tabak & Co.

“There’s incremental streamlining of the operations, which could result in better margins and more of a stake in those cable networks over time,” he said. “It doesn’t move the needle for Disney in the grand scheme of things but it would skew positive.”

NBC Universal was already the junior partner in A&E Television Networks, with a 25 percent stake, compared with 37.5 percent each for Disney and privately held Hearst.

If no cash was exchanged, NBC Universal’s stake in the venture would shrink, giving it less of a strategic position, said Standard & Poor’s analyst Tuna Amobi.

What’s more, Lifetime targets women viewers, which overlaps with the target demographic of NBC Universal’s Oxygen.

“This offers a clear path for NBC potentially to exit,” Amobi said.

Lifetime, A&E and History channels are among the top 10 cable networks on television.

Combined, all of the channels in the new group are expected to take in about $2.6 billion total from advertising and subscription fees this year and generate about $840 million in cash, according to research firm SNL Kagan.

Fitch Ratings said in a research note that it could come to view the networks as part of Disney’s core operations, but said it did not expect any material impact on its $400 million to $500 million in annual cash dividends from its stake in the venture.

With the addition of Lifetime channels, the group will now include: A&E Network, History, Lifetime Television, Lifetime Movie Network, Bio, History International, Lifetime Real Women, History en Espanol, Military History and Crime & Investigation Network.

Disney shares fell 3 cents to $26.97 in afternoon trading Friday. General Electric shares were up 10 cents at $14.21.