Lions Gate selling 49 percent of TV Guide channel

By Sue Zeidler

LOS ANGELES (Reuters) - Lions Gate Entertainment Corp (LGF.N) agreed to sell a 49 percent stake in the TV Guide channel for about $123 million, aiming to turn the network into an entertainment channel.

The buyers are One Equity Partners, a private equity arm of JPMorgan Chase & Co (JPM.N), and Allen Shapiro, former chief executive officer of Dick Clark Productions, who had previously reached a deal to buy the network before it was sold to Lions Gate, the studio said on Thursday.

While TV Guide Networks is distributed in more than 83 million homes, its lack of significant original programing has prevented it from being a strong contender as an entertainment destination -- particularly as on-screen electronic program guides are provided now by satellite and cable providers.

Lions Gate is bringing Shapiro and One Equity in to try to transform TV Guide into an entertainment network akin to NBC Universal's Bravo channel, News Corp's (NWSA.O) FX, or Cablevision System Corp's (CVC.N) AMC.

Shares in the independent film studio behind the "Saw" movie franchise and "Mad Men" TV series closed up 3.5 percent to $5.60 on the New York Stock Exchange.

Shapiro had struck a deal to buy the TV Guide channel and accompanying web sites from Macrovision Solutions Corp MVSN.O back in late 2008. But Macrovision killed that deal in January and instead sold the company to Lions Gate for $255 million.

"The face of the network will shift in January. That will give us running room with Allen to bring our resources to bear," said Lions Gate chief executive officer Jon Feltheimer in an interview.

One Equity Partners retains the option of buying another 1 percent stake under some circumstances. The deal further solidified its ties with JPMorgan, the lead banker on its $340-million credit facility.

Shapiro said on Thursday the TV Guide assets are unique and offer opportunities for sustained future growth.

In October 2008, Macrovision sold the once wildly popular TV Guide magazine to equity fund OpenGate Capital for $1. Connections between the magazine and network were severed.

WANTED: CONTENT

Lions Gate plans to shift it away from the scrolling guide to more content. Since closing the acquisition of TV Guide in March, it has aggressively bid on programing like HBO's popular "Entourage" series, said a person familiar with the deal, noting it was ultimately edged out by higher bidders.

Lions Gate co-owns FEARnet, a video-on-demand Internet horror channel, with Sony Corp (6758.T) and Comcast (CMCSA.O). It is also involved in Epix, a network it is developing with Viacom Inc (VIAb.N) and Metro-Goldwyn-Mayer Inc MGMYR.UL, to begin operation in October.

Activist shareholder Carl Icahn, with a 14.5 percent stake in Lions Gate, had called the TV Guide acquisition reckless and said he might wage a proxy war for the studio.

He recently offered to buy $316 million in debt, but got only $583,000 worth of convertible bonds.