E! OWNERSHIP COULD CHANGE; BUY-SELL CLAUSE TRIGGERED BY CABLE NETWORK'S PARTNERS

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Four cable systems operators that each hold 10% of cable's E! Entertainment Television have triggered a clause in the ownership agreement that forces majority owner Time Warner Entertainment to valuate the network.

Once that's done, any of the multiple-system operators-Tele-Communications Inc., Continental Cablevision, Cox Communications and Comcast Corp.-can opt to buy out any or all of the other partners. Or they can all cash out, allowing Time Warner to ante up for sole ownership.

EFFECT ON AD SALES

New ownership could affect E!'s ad sales, which media analysts Paul Kagan Associates estimate will pull in revenue of $45.9 million this year.

Neither Time Warner nor the MSOs would comment.

E!, with 41 million subscribers, could be worth upwards of $820 million based on an industry average of $10 to $20 per subscriber.

One reason the MSOs triggered the buy-sell was the issue of control. TCI, for example, has made it clear it usually wants at least 20% of any network in which it invests. And Comcast wants to start building a more aggressive programming portfolio.

Furthermore, said another executive familiar with the deal, some MSOs wanted to force Time Warner's hand. Time Warner owns 50% of E! directly and another 8% or so through a joint venture with Advance Publications and Newhouse Broadcasting Corp.

Time Warner also gets a fee for managing the network, though E!'s ad sales unit is separate from other Time Warner entities.

FOLDED INTO TURNER UNIT

If Time Warner gains sole ownership of E!, it would likely fold the company's ad sales organizations into its newly acquired Turner Broadcasting Sales unit.

If, on the other hand, E! is bought by one of the MSOs, it could be resold to a company such as NBC, which has publicly stated its interest in acquiring a general entertainment network.

One question that would have to be settled in any new ownership structure is carriage agreements with the MSOs that are bought out.

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