From Cablevision's point of view AMC may have more value as a way to garner cash than as part of the now smaller Cablevision national channel portfolio, says Larry Haverty, portfolio manager at State Street Research.
"If you're AMC, just hypothetically, your worst nightmare is Brian Roberts [who will head the expected combination of cable operators Comcast and AT&T] calling you up and saying `It's five cents a subscriber less or we're taking it off the air,"' says Haverty. "Market power on one side of the table needs to be met by market power on the other side."
Cablevision president and CEO James Dolan, speaking on a conference call with analysts, didn't rule out the sale of AMC. But he did say that it was no longer a necessity, after the sale of Bravo had raised $1.25 billion for the cash-strapped company.
Analysts say MGM, which could unleash its film library titles such as James Bond and Rocky on the movie channel, is the most likely buyer. MGM has already expressed an interest in purchasing AMC-it already holds a 20% stake in AMC and the other Cablevision nets We and IFC-at the right price. Representatives for both companies refused to comment.
Viacom CEO Sumner Redstone has expressed an interest in acquiring cable channels, including AMC, in recent presentations to investors. AMC would be a natural outlet for the Paramount library. A Viacom spokeswoman declined to comment.
An MGM purchase would buck the cable industry trend toward consolidation, as MGM would be a solo-player with only one cable channel. A Viacom deal, on the other hand, would put yet more power in the hands of the content giants.
With the Bravo purchase NBC is further on its way to joining that oligopoly. The Bravo deal also opens up new programming opportunities, creating a laboratory for NBC.
With a second revenue stream from subscription fees and more modest dollar ranges on the ad front, cable allows for more experimentation. Bravo pulled in $52 million last year in ad revenue, according to Taylor Nelson Sofres' CMR-about what NBC gets for seven episodes of "Friends."
The first collaboration between NBC and Bravo will be to repurpose NBC programming, especially reality series. "With reality series, you film a lot of extra stuff," says Jeff Gaspin, exec VP-programming for alternative series, specials, and movies for NBC. "And you certainly could have different versions, possibly running at the same time and not even have overlapping material."
NBC dropped another hint how it might experiment with Bravo, when entertainment head Jeff Zucker told The New York Times he plans two versions of drug-war show "Kingpin," one for network, one for cable.
The urbane reputation of Bravo, with shows like "Inside the Actors Studio," dovetails with how NBC bills itself vis-a-vis its network competitors: the locale for sophisticated professional types with discretionary incomes. "They don't have to dilute the Bravo brand. They are classy, uptown,"says Tim Spengler, exec VP, Initiative Media.
And NBC executives say they don't plan a makeover of Bravo, which ranks second among cable entertainment outlets in attracting households with incomes of $75,000-plus.
The top three executives at Bravo-Kathy Dore, president; Ed Carroll, VP-general manager; and Gregg Hill, exec VP-affiliate sales and marketing-will stay at Cablevision. Bravo referred all queries to NBC.
NBC will do selective cross-advertising deals for NBC and Bravo. But media executives say these deals are not the driving force behind the acquisition of Bravo, given that it typically takes a long time to get these deals done and is difficult to agree on a price for a package that includes both cable and network content.
One thing appears clear: NBC got a favorable deal, analysts believe. Cablevision needed cash and NBC capitalized. At $1.25 billion, Hal Vogel, CEO of Vogel Capital Management, estimates NBC paid 16 to 18 times cash flow-a bargain compared to the 30 times cash flow (almost $5 billion) Disney paid for Fox Family last year.