« Diane Mermigas | Main | NY Times’ Front Page Wingnut Deniers »
October 11, 2007
NBC Buys Oxygen
Sounds like a lifesaving move, doesn’t it? Well, maybe it is. This week NBC announced that it was buying Oxygen Media, whose biggest asset is, of course, the young female-oriented Oxygen cable channel. A Media Curmudgeon reader emailed me the following question: “NBC buys iVillage, now Oxygen. What are they thinking?”
So, here’s my response: I think it’s clear NBC overpaid for iVillage and doesn’t seem to have done much with it, but I think buying Oxygen is good for NBC—fits in with their cable offerings such as USA and Bravo—and fills in the younger segment of the female demo for them. Also, cable networks continue to grow as the latest ratings show prime time terrestrial TV numbers are down (still big, but down). NBC can package Oxygen with its other cable nets for a very attractive bundle for agencies.
This move appears to be smart strategically and, although overpriced at $925 million, not outrageous so if you look at Oxygen’s revenue. It’s kind of like Murdock being willing to pay more than anyone else for the WSJ because it’s worth more to him strategically. Oxygen is worth more to NBC, including keeping it away from the competition. It also demonstrates to Wall Street that NBC is on the move and growing at a time when rumors are rife that GE wants to sell NBC—adding Oxygen Media to its asset mix increases the price an acquirer would have to pay for NBC. PaidContent.org reports that GE has decided not sell NBC until after the Beijing Olympics next August. If this is true (and I’ve found PaidContent is pretty wired in and usually reliable), then it’s a clear signal that GE intends to sell NBC.
I have written before that Time Warner needs to show some growth, and I think it should have bought Oxygen Media. I also have written that Time Warner should buy NBC if it ever hopes to grow its stock price. So, TW should have demonstrated some courage and strategic growth by going for a younger demo than some of its current cable networks such as CNN, TBS, and TNT have and to complement the content of Comedy Central and the Cartoon Network.
Time Warner is breathing hard trying to get its stock price up and it needs Oxygen.
Posted by Charles Warner at October 11, 2007 01:50 PM
Comments
Bruce Braun ![[TypeKey Profile Page]](http://www.mediacurmudgeon.com/nav-commenters.gif)
at October 11, 2007 03:09 PM writes:
As a competitive cable network, Oxygen is essentially on oxygen. When your target audience delivery is behind three to ten other cable networks, it is a BIG problem. Worse, Oxygen's programming borders on the unwatchable. Tyra Banks, Janice Dickinson's Modeling Agency, Mo'Nique's F.A.T. Chance, Tori & Dean: Inn Love...PLEASE! The Soup on E wouldn't be able to produce their weekly reality show clip fest if it were not for Oxygen. Oxygen would be on a respirator if they didn't have reruns of Rosanne, Mad About You and Ellen.
NBC didn't buy Oxygen for the programming, sales revenue or crack executive team. What NBC bought was distribution. How much money has Oxygen tanked since it first launched? I'll wager, a lot more than $925M. Gazillionaire star f&#ker Paul Allen (think DreamWorks, Pro sports teams etc) with more money than common sense was sucked in by the dazzle of being invited to Oprah's New Years party. How many hundreds of millions did he and all the other "investors" flush on Oxygen? When Oxygen launched, the "investors" list read like the investor list of a new restaurant opening in Beverly Hills. It was all about those folks and their egos and had nothing to do with attracting an audience.
What NBC figured out and what still seems to be a mystery to Time-Warner is distribution is the key to EVERYTHING when it comes to content monetization. Content can always be produced and stored. The big challenge is getting your content in front of massive amounts of eyeballs and or ears. With 75M+ households, Oxygen has critical mass for reaching an audience.
Buying Oxygen allows NBC to avoid the huge costs associated with launching any new cable network. All the extortion money (Oh, pardon me, "Marketing Support") for carriage has been paid to the cable MSO's, long term carriage contracts are probably in place and some brand identity exists. The only things missing are good content access and a powerful ad and affiliate sales organization. NBC has the latter two in spades.
With Oxygen, NBC bought a fixer-upper, with a good foundation on some prime beach front property. Too bad for Time-Warner that with AOL they think of it as some sort of albatross that has been hanging around their necks since 2000. Time-Warner would not know a good deal if it bit them on the leg. Witness the way they have treated AOL like it is the bastard child of a failed romance. Perhaps Randy Falco is a double-agent, dispatched by GE to figure out how NBC can scoop up a fabulous online business for pennies on the dollar!
Post a comment
Thanks for signing in, . Now you can comment. (sign out)
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)Printer-Friendly