"In just seven short years, Oxygen has become the crown jewel of independent networks," Mr. Zucker said in a statement. "It's a terrific property with a clear mission, strong brand and desirable audience. This acquisition increases our foothold in the advertiser-coveted young, upscale, female demographic, and perfectly complements our current roster of cable channels and plays to our strength of running and operating cable networks."
Steadily built the brand
Founded in 2000 by CEO Geraldine Laybourne, a veteran of children's cable who helped launch Nickelodeon in the early 1980s, Oxygen has steadily built a brand targeting young women, primarily those 18-24. Oprah Winfrey, a co-founder and early investor, brought buzz to the network's launch by offering an additional hour of content from her daytime talk show called "Oprah After the Show. (Ms. Winfrey has already "cashed out" of her investment and "Oprah After the Show" has been "off the network for awhile now," Ms. Laybourne, 60, said during a conference call following the sale announcement.)
But in recent years the network has established more of a rebellious brand identity through humorous reality programming such as "Girls Behaving Badly," "The Bad Girls Club" and "Tori & Dean: Inn Love." Ratings have also increased steadily, with this year's third quarter finishing up as the highest-rated in the network's history.
The network's ad sales chief, Mary Jeanne Cavanaugh, has also taken an aggressive stance in the cable marketplace in recent months. She scheduled Oxygen's first-ever upfront presentation to advertisers in January of this year -- months ahead of its competitors Lifetime and Rainbow Media's WE -- and brought marketers such as Home Depot and Intel to the network for the first time through a unique sales offering in the eBay Media Marketplace. If that translates into strong fourth-quarter sales, revenue could grow substantially: Oxygen took in about $49.1 million for the first half of 2007, and about $102.1 million in full-year 2006, according to TNS Media Intelligence.
"This deal with NBCU is the best way for Oxygen to grow," Ms. Laybourne said in a statement. "In seven years, we built a spectacular brand for women. We built Oxygen from scratch -- we became profitable, grew from zero to 74 million subscribers and produced original programming that resonates with young women everywhere. I couldn't be more proud of my team. Now together with NBCU, Oxygen can become an even bigger brand."
NBC's profitable cable portfolio
Oxygen joins an increasingly large stable of cable networks, which accounts for 50% of NBCU's profits. Leading the pack is USA Network, the top-rated network on basic cable, along with Bravo, Sci-Fi, MSNBC, CNBC and Telemundo. The Oxygen bill will largely be footed by the sale of non-core assets like two independent Telemundo TV stations in Los Angeles (KWHY) and Puerto Rico (WKAQ).
On the digital side, Oxygen represents an appealing asset to pair with iVillage, the women's media empire NBCU acquired for $600 million in 2006. General Electric Chairman Jeffrey Immelt said last year in an internal NBCU meeting that the company "probably overpaid" for iVillage but hoped to boost revenue over time and make it a large part of the $1 billion in digital revenue the company aims to rake in by 2009.
Regarding the future iVillage integrations with Oxygen, Mr. Zucker said during a conference call today that there is "no intent to combine the two entities. Given Bravo, given Oxygen and given iVillage, we look to create a virtual women's network so that when we go to market we're selling young women and affluent women in a way that virtually no one else can. We go to market now with a suite of assets that's unmatched in the female demographic -- that's what we mean about combining assets. Not physically combine them, but all remain strong independent brands." He added that repurposed segments from the "Today" show airing on Oxygen is "certainly a possibility" going forward.
Beth Comstock, NBCU's head of integrated media, shepherded iVillage to the company's portfolio, and has since been under scrutiny to make the investment pay off. As a result, her two-year tenure has been rumored to be nearing an end. Mr. Zucker said Ms. Comstock's duties will not be affected by the Oxygen acquisition, and that "further announcements" will be made down the road regarding the placement of Oxygen's existing digital and sales staff under the new ownership.
Ms. Laybourne will stay on at Oxygen until the end of the year, after which, she joked, "I plan to run for ..." before stopping herself with laughter.
"Obviously we will make some further announcements over who will lead the network in the coming weeks and months," Mr. Zucker added.