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Comcast can up E! stake
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January 10, 1997: 11:14 a.m. ET
Cable operator could acquire Time Warner's stake in E! for $310 million
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NEW YORK (CNNfn) -- Through a sealed election process, Comcast Corp. has won the chance to purchase Time Warner Inc.'s 58 percent stake in E! Entertainment Television at a cost of about $310 million, published reports said Friday.
The Philadelphia, Pa.-based cable operator hasn't yet decided whether it will buy the entertainment news cable channel.
But it has the ability to buy Time Warner's stake, sell the remaining 42 percent to Time Warner by proxy, or simply leave ownership of the 42 percent share unchanged. Under the original agreement, Comcast, Cox Communications Inc., Continental Cablevision Inc., and Tele-Communications Inc. controlled the 42 percent share, each holding 10.5 percent.
Aside from operating cable systems which serve about 4.3 million subscribers, Comcast also maintains cellular phone systems and owns Philadelphia's professional basketball and hockey teams, and the QVC shopping channel.
Comcast appears to be making this move in an effort to supplement its programming portfolio, according to Friday's Wall Street Journal.
E! already reaches some 42 million subscribers, and it is rare that a network of this size is available for acquisition. As the paper reported, purchasing an established network such as E! is far easier than launching a new network.
Given Comcast's current debt load of nearly $6.8 billion, it is unlikely that the company will purchase the 58 percent stake directly. Rather, it seems more likely that Comcast will engage an equity partner -- such as Viacom Inc. or Seagram Co. -- to offset deal costs, or that it will use QVC's fast-growing cash flow, which currently stands at about $300 million per year.
Time Warner would also profit from the sale of its stake, giving the company the opportunity to offset $310 million of its $17.5 billion in total debt.
Comcast and Time Warner could not be reached for comment.
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