SBJ/20100208/This Week's News

Sources: Viacom in talks to buy Fuel TV

Fox Cable Networks is in advanced discussions on a deal that would sell its action sports channel Fuel TV to Viacom, according to several sources with direct knowledge of the talks.

The sale was expected to close late last year, but the parties are still negotiating an agreement. Talks began last year when the companies discussed entering a joint venture around Fuel TV, but subsequent discussions led the parties to negotiations on a complete sale of the channel. Sources say Viacom will pay a sum in the low to mid-nine figures to secure the channel.

Officials at Fox and Viacom declined to comment.

Currently, Fuel TV is based in Los Angeles where it is run by general manager C.J. Olivares. It’s not clear whether the channel’s operations would move from Los Angeles to New York or how many redundancies there would be.

Fox launched Fuel TV in July 2003. The channel now has close to 30 million subscribers through a mix of digital- and sports-tier carriage. Cable and satellite operators generally pay around 15 cents per subscriber per month for the channel if it’s on a well-penetrated digital tier, double that if it’s relegated to a sports tier.

Negotiations between the two started about a year ago but cooled in the second half of the year as Fox concentrated on its all-encompassing end-of-year renewal with Time Warner Cable.

Fox’s decision to sell Fuel TV fits with its new strategy to jettison niche cable channels that would find it hard to exist on their own. At the end of March, for example, Fox will replace another niche channel, Fox Reality, with Nat Geo Wild, a spin-off of Fox’s bigger National Geographic Channel.

Fox would rather get the highest license fees out of its strongest channels, like FX or its RSNs, rather than use them to drive distribution of smaller channels such as Fuel.

Fuel TV would fit with Viacom’s portfolio of cable channels and programming strategy. With channels like MTV, Viacom is a dominant player in the Gen Y programming space and had begun competing with Fuel in earnest last year when it picked up a Fuel series called “Nitro Circus” featuring action sports star Travis Pastrana.

Sources say Viacom’s programming budget is four times bigger than Fuel’s, which is how it was able to wrest a show like “Nitro Circus” from Fuel. Viacom increasingly has emphasized action sports programming on its MTV and MTV2 networks with shows like “Nitro Circus” and “Rob & Big.”

Viacom also is a stakeholder in Alli Sports, the company behind the Dew Tour. It airs Alli programing on MTV2, but the addition of Fuel TV would allow it to shift some of that programming to a channel devoted exclusively to action sports.

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