Viacom Sells Stake in Lifetime Television for $317.6 Million

Strategic Insights -

Viacom Inc. agreed to sell its one-third interest in Lifetime Television to its partners, the Hearst Corporation and Capital Cities/ABC Inc., for approximately $317.6 million in cash. This sale aims to help Viacom pare the $7 billion it borrowed to buy Paramount Communications Inc. The deal is expected to be completed on Monday, marking the end of a 10-year partnership between Viacom, Hearst, and Capital Cities/ABC. In a separate development, rumors are circulating about Viacom negotiating the sale of its cable television systems with Tele-Communications Inc. for more than $2 billion.

Key Takeaways:

  • Viacom sold its one-third interest in Lifetime Television to Hearst Corporation and Capital Cities/ABC Inc. for approximately $317.6 million in cash.
  • The sale is part of Viacom's efforts to pare its $7 billion debt incurred from buying Paramount Communications Inc.
  • Analysts believe the sale of Viacom's cable operations would make sense if the proposed merger with Blockbuster Entertainment falls apart.
  • David Londoner, an analyst at Wertheim Schroder, said the sale price of Lifetime Television was "rich, but not outlandish."
  • Viacom's interest in Lifetime Television ends a 10-year partnership between Viacom, Hearst, and Capital Cities/ABC.
  • The sale is expected to be completed on Monday, with Hearst and Capital Cities owning a 50 percent interest in Lifetime Television each.

Statistics:

  • Viacom borrowed $7 billion to buy Paramount Communications Inc.
  • The sale of Viacom's interest in Lifetime Television is for approximately $317.6 million.
  • Lifetime Television is available on more than 5,800 cable systems across the country, serving nearly 59 million households.
  • The proposed merger between Viacom and Blockbuster Entertainment was valued in the $10 billion range.
  • Tele-Communications Inc. allegedly offered to buy Viacom's cable television systems for more than $2 billion.

Sources:

  • Bloomberg Business News
  • Paul Kagan Associates
  • Wertheim Schroder
  • Paramount Communications Inc.