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Cable Technology Feature Article

February 19, 2013

CBS Gives Mark Cuban's AXS TV a Shot in the Arm

By Tara Seals, TMCnet Contributor

Billionaire tech maven and Dallas Mavericks owner Mark Cuban and Los Angeles entertainment giant AEG Broadcasting are getting some help with their joint television channel project, AXS TV. CBS Corp. is taking a minority stake in the music-themed channel, but perhaps more importantly, it will contribute content and marketing help.

Financial terms were not disclosed, but CBS is bringing a sack full of programming goodies to the network. For instance, the broadcaster has exclusive rights to a range of red-carpet events, like the Grammy Awards, Broadway's Tony Awards and the Academy of Country Music Awards, for which it plans to make AXS TV an outlet for bonus and behind-the-scenes content, according to the LA Times.

"Everyone wins," CBS CEO Les Moonves told the paper. "We are providing our programming and promotion. The intent of this channel is to do live programming and events and we have some of the biggest live events, including the Grammys and the Tonys."

Another big piece of good news for AXS TV is the fact that it will promote the channel on its television network (No. 1 in prime time at the moment), as well as via its local TV station affiliates, radio stations and billboards. That’s something that AXS TV can really use, considering that it has struggled to land carriage deals with cable, satellite and IPTV companies. For now, it’s available in 38 million homes via DirecTV (News - Alert), DISH, Comcast and Charter Communications; only a third of U.S. households with TVs have access to it.

The lack of distribution is particularly concerning given the increasing unwillingness of pay-TV operators to pay for smaller channels with niche audiences. And that’s a problem for standalones like AXS TV. Recently Time Warner (News - Alert) Cable dropped arts channel Ovation from the lineup, unilaterally, citing poor ratings—making it very unclear whether Ovation will survive. And when Al-Jazeera bought Current TV—Al Gore’s progressive news channel—in January for $500 million, TWC announced that it would be dropping that channel, too (which has never been a ratings darling).

SNL Kagan researcher Derek Blaine noted that the Al-Jazeera transaction works out to $10 per sub, “a decent price for a struggling network like this.” But TWC then said that it plans to remove the channel as quickly as possible, undermining the network’s economic viability.

“Prior to Time Warner Cable's dropping the channel, we were forecasting the channel having 59 million subs and generating $16.4 million in cash flow on $108.1 million in revenue,” Blaine said. “With the evaporation of 9 million Time Warner Cable subs and the license fees that go with it, this brings the channel closer to break-even.”

So, CBS’ involvement could be a lifeline for the channel in terms of stimulating ratings and finding additional exposure.

"This is really going to take AXS to the next level and really push us forward," Cuban told the LA Times. “Our partnership with CBS will give us access to more content, more live events and much more promotional power."

Edited by Rachel Ramsey

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