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J-Lo has outbid Puff Daddy in a battle to acquire pay-TV distribution for their rival cable networks.
NuvoTV, backed by Jennifer Lopez, has reached an agreement to buy Fuse TV from Madison Square Garden Co., the companies said Friday. The pop star and entrepreneur, known as J-Lo by fans, outbid hip-hop mogul Sean "Puff Daddy" Combs, offering $226 million in cash and a 15% equity stake in the combined Fuse and NuvoTV, an English-language channel marketed to Latinos.
NuvoTV will use Fuse to expand its audience. Even with Ms. Lopez's star power, the channel can more easily gain eyeballs by acquiring another network than by trying to secure its own deals with pay-TV operators. Los Angeles-based NuvoTV reaches more than 32 million households, less than half of FuseTV's 73 million. Time Warner Cable Inc. and DirecTV have been dropping low-rated channels to focus on the most popular ones.
The deal "enhances our distribution relationships, dramatically expands our aggregate subscriber base, provides substantial economies of scale, affords unique opportunities for programming and cross-promotion and should be extremely appealing to the advertising community," Michael Schwimmer, chief executive officer of NuvoTV, said in today's statement.
The financial terms of the deal may be reduced based on certain performance goals, according to the statement. MSG will also gain a seat on the board of SiTV Media Inc., the parent company of NuvoTV. The deal is expected to close between July 1 and Sept. 30.
Mr. Combs, who was once linked romantically to Ms. Lopez, also sought to buy Fuse for its distribution. The rapper, who has been known as P. Diddy, announced he would return to his stage name of Puff Daddy in a recent teaser video for his next single.
Revolt, a music-focused TV network he founded with Comcast Corp., had bid about $200 million, people familiar with the matter said last month.
Al Jazeera acquired Al Gore's Current TV for about $500 million last year. Current reached about 60 million U.S. homes.
Ms. Lopez, who holds a minority stake in NuvoTV, is the chief creative officer there and contributes programming through her Nuyorican Productions. The 44-year-old singer, actress and "American Idol" judge also advises the network on strategy and marketing.
"It's exciting that between NuvoTV and Fuse we'll have the ability to deliver a broad array of terrific content both from a Latino perspective and across multiple genres, including music, to a broader audience," Ms. Lopez said in the companies' statement.
Ms. Lopez, also known as J-Lo, got her start as a dancer on "In Living Color" in the early 1990s. She went on to sell 70 million records, according to her website, and has perfume, jewelry and clothing lines, among other businesses. Her company produces "The Fosters," an ABC Family series about a lesbian couple raising biological and foster children.
NuvoTV raised $40 million in 2012 from Columbia Capital, Rho Capital Partners, Veronis Suhler Stevenson and Tennenbaum Capital Partners. LionTree Advisors advised NuvoTV on theFuse TV deal.
MSG, based in New York, said in September it was working with JPMorgan Chase & Co. to find a buyer for Fuse.
~ Bloomberg News ~