The Sundance Channel, the cable network spawned from Robert Redford’s eponymous annual film festival, is up for sale.
Investment bank UBS has been quietly shopping the network and is “down the road with a few key buyers,” according to a source close to the situation, who added that a deal should be wrapped up “in a few weeks.”
Not unlike the deal for cable network Oxygen, The Sundance Channel auction illustrates how difficult it is for a standalone cable network to compete against larger players such as Viacom or Time Warner, which have a stable of channels that they can bundle together to gain pricing leverage against cable and satellite operators.
According to a report by Pali Research analyst Richard Greenfield, The Sundance Channel could fetch between $400 million and $500 million.
That price would equate to just over $15 for each of the network’s 26 million subscribers at the low end and around $19 at the high end. The channel is available in more than 85 million homes.
NBC last year bought Oxygen for $925 million, or roughly $12 per subscriber.
Though Redford launched The Sundance Channel for artistic rather than financial reasons, the prices being bandied about would net the legendary star of such films as “The Sting” and “All the President’s Men” between $40 million and $50 million for his 10 percent stake.
NBC Universal is The Sundance Channel’s largest shareholder, with a 55 percent stake. CBS owns the remaining 35 percent through its Showtime premium cable network.
While both those companies would be natural buyers for the channel, Greenfield notes that “issues surrounding pricing to an existing owner make it more likely that the network is sold to a third-party.”
Absent NBC and CBS, Greenfield sees Cablevision, Time Warner and Viacom as potential buyers.
“We believe Cablevision has a keen interest in Sundance as it could leverage its existing IFC/IFC Films franchise, as well as its AMC Network experience related to transitioning from a [subscriber-fee] only model to a sponsorship-driven model.”
The Sundance Channel’s business model has been moving away from being based solely on subscription fees to selling advertising sponsorship’s around its programming. Citigroup and Lexus sponsored the launch of environmentally friendly show “The Green,” for instance.
Greenfield speculates that Time Warner and Viacom might want to acquire Sundance as a way to leverage their specialty films divisions, Warner Independent Pictures and Paramount Vantage, respectively.
An acquisition by any of those companies would enhance The Sundance Channel’s financial prospects since it could be bundled with their other cable network holdings in carriage talks with distributors.