NBC Universal buying Oxygen

Oxygen Media was one of cable's most star-studded new channels when it launched in 2000 with backing from Oprah Winfrey, the producers of The Cosby Show and billionaire Paul Allen.

But after seven years of struggling to grow in a business dominated by large conglomerates, the independent channel on Tuesday sold itself to NBC Universal. ge

General Electric's NBCU says it will pay $875 million for the service for women that is available in 74 million cable and satellite homes.

"Oxygen is a perfect fit" for NBCU, which also reaches women with its Bravo cable channel, Today show and iVillage online service, says CEO Jeff Zucker. "Cable is the real driver for this company."

NBCU's cable services also include USA Network, MSNBC, CNBC and Sci-Fi Channel.

The company says it will pay for the acquisition, expected to close next month, by selling TV stations in Los Angeles and Puerto Rico that carry its Telemundo Spanish-language network. "We had three channels in Los Angeles and had to come into the proper guidelines with the Federal Communications Commission," which limits how many stations a company can own in a market, Zucker says.

He adds, though, that "we are as committed as we have been" to Spanish-language TV. "We've been adding stations to our portfolio."

Oxygen CEO Geraldine Laybourne says that she and the channel backers "all cash out" with the deal. She declined to say, though, who's now the largest shareholder.

Oxygen became profitable in 2005 and should generate about $20 million in cash flow on nearly $174 million in revenue this year, according to SNL Kagan.

Its growth potential is murky, though. Cable and satellite providers pay about 9 cents a month for each subscriber who receives Oxygen. Yet since it now reaches 74 million subscribers, "in the current world there isn't that much further to go" except as a digital network, where cable customers pay an added fee for extra services, says Jeff Gaspin, who manages the NBCU Entertainment Cable division.

The biggest opportunity, then, is in ad sales. "We need cross-promotion," Laybourne says. "That was the attraction of NBC."

Laybourne, who became a legendary figure in cable by helping to build Nickelodeon at Viacom, will leave Oxygen at the end of the year.

"We will make further announcements about who will lead the network," says Gaspin.

He also says viewers can expect to see more scripted as well as reality shows on Oxygen. Its current programming includes The Janice Dickinson Modeling Agency, The Bad Girls Club, and Tori & Dean: Inn Love and Campus Ladies.