NBC Universal to Buy Oxygen

Ending weeks of speculation, NBC Universal confirmed Tuesday that it will buy independently owned women’s cable network Oxygen under a deal the company valued at $925 million.

NBCU plans to market Oxygen to advertisers as part of a “virtual women’s network” that would include pop-culture cable network Bravo, morning program Todayand female-focused online community iVillage, NBCU president and CEO Jeff Zucker said.

Oxygen -- launched and currently headed by cable-industry veteran Gerry Laybourne in 2000 -- will be folded into NBCU's Entertainment Cable division, led by Jeff Gaspin, president and chief operating officer of Universal Television Group.

While Oxygen gains the cross-promotional power that it could never leverage as an independent, NBC gains another cable network through which to market its own female-friendly fare, as well as a linear channel through which to market iVillage. NBC has struggled to leverage iVillage since buying it for $600 million last March, but its cable networks -- including USA Network, Sci Fi Channel and Bravo -- have driven significant growth for the company.

“When we go to market, we’re selling young women and affluent women in a way that virtually no one else can when you look over our properties,” Zucker said. “We go to market with a suite of assets that is unmatched in the female demographic.”

Although NBC’s struggles to leverage iVillage have been well-publicized and General Electric chief Jeff Immelt has said that he thought NBC overpaid for the site, Zucker took umbrage with the idea that its integration has been problematic.

“I don’t buy that the iVillage integration hasn’t gone exactly as we had hoped,” he said. “The fact is [that] iVillage is a very important part of the digital landscape of this company.”

He cited the site’s 17 million unique visitors per month and said that audience combined with Oxygen’s could make for a powerful sales prospect to companies looking to target young women.

Laybourne -- who started the channel with backing from Oprah Winfrey and TV producers Marcy Carsey, Tom Werner and Caryn Mandabach -- is committed to staying at the network through the end of the year. Executives close to the situation said they did not expect her to remain on after that. While NBCU did not comment on the matter, a likely candidate for the position is Bravo chief Lauren Zalaznick.

NBC has a history with integrating cable properties, namely Bravo, which it acquired as a 54 million-home arts channel in 2002 and has transformed into a fully distributed network of pop-culture fare, which targets an upscale, educated audience it has named the “affluencers.”

In 74 million homes, Oxygen is already further along than Bravo was in terms of distribution, although it is a distant also-ran to Lifetime Television and sister channel Lifetime Movie Network in audience size. Still, Oxygen has succeeded in setting itself apart with more fun fare, like critically acclaimed scripted series Campus Ladiesand Tori Spelling reality show Tori & Dean: Inn Love.

“We have great programs, but we have absolutely no cross-promotional platform, so that was the attraction of NBC, plus the fact that it has so many quality brands and a vast array of things that can help us,” Laybourne said.

NBCU said it expects to close the Oxygen deal in November and valued it about $12 per subscriber. The company added that that in merging Oxygen’s assets with its existing infrastructure, it will save about $35 million next year.

Zucker said NBC will spend the next four to eight weeks assessing Oxygen’s staff and figuring out how to bring them under the NBC umbrella. The network, currently housed at New York’s Chelsea Market building, will likely not move to NBC headquarters at 30 Rockefeller Plaza due to lack of space.

In deciding on the buy, NBC noted that Bravo had recently been pitched some of the same shows as Oxygen, but it had to pass on them because their target audiences were too young, according to Gaspin. Now, he said, the two networks could program similar fare with said the former continuing to target an 18-49 and 25-54 audience and the latter 18-34.

“We’ve been looking in the rearview mirror and watching Oxygen coming closer and closer,” he said.