UFC in talks to buy 60% of the G4 cable network from Comcast

The big news today is that the Wall Street Journal (free registration required) and the New York Times are reporting that UFC is in negotiations to buy 60% of video game themed turned dollar store Spike TV cable network G4 from Comcast.  According to Bloomberg.com, analysts value a G4 purchase at $600 million.  UFC has an existing relationship with Comcast as they also own Versus, the former home of WEC turned secondary UFC TV outlet in the US.  While it was well known that UFC was looking into leaving Spike TV when their contract expires in December, it didn't seem like anyone knew something like this was coming.  It's not clear how close the two companies are to a deal.

It doesn't necessarily seem like G4 would become The UFC Network.  UFC would be taking over a cable network that focuses on their key young adult demographic, allowing them time to show whatever programming they want and giving them free slots to air prelim matches, major foreign events, back catalog shows featuring old UFC, Pride, WEC, and Strikeforce footage, etc.  They could also promote more cards featuring lower level fighters if they had their own network.

As far as SpikeTV goes, the original version of the Times story from their media decoder blog included some details not in the version linked at the beginning of this post, which appeared in this morning's print edition:

Spike's $170 million-a-year deal with UFC for the show, "The Ultimate Fighter," and for live fights expires in six months. Negotiations between Spike and UFC for a new deal started almost one year ago, one of the people said, but broke down after UFC proposed a $325 million-a-year fee, a price that was far steeper than Spike was willing to pay.

If those numbers seem too high, there's a reason for that.  SBNation's own Jonathan Snowden (who wrote a great article about the pros and cons of UFC buying G4) explained on Twitter:

As every has been figuring, if UFC leaves Spike TV, then Bellator will move over from Viacom sister channel MTV 2 to replace them and gain a bigger potential audience in the process.  Bellator has received enough plugs on Spike recently that it's clear a message is being sent to UFC.  Bellator would probably gain some viewers, but I doubt they could do as well as UFC does in terms of ratings.

If UFC makes this move and buys G4, they lose a huge chunk of both their potential and actual audiences.  Spike is in about 96 American million homes in while G4 is in about 60 million.  Spike's roots as The Nashville Network are partially responsible for its wide penetration, as it launched way back in 1983.  Meanwhile, G4 is no longer carried on the DirecTV satellite service, which has about 20 million subscribers.  With UFC being a big money maker for cable and satellite companies via their PPV events and Comcast still owning 40%, they would have the potential to expand, but it would still be a huge step down.  Bellator's current home, MTV2, has been constantly referred to as too small for them to develop a decent sized audience, and it's in 64 million homes, more than G4!  G4 does have an advantage in that it has a distinct identity, which MTV2 lost years ago.  I would guess that most people who are aware of MTV2 and have access to it have no idea that any original programming is aired there.

Meanwhile, WWE has been looking into starting their own cable network.  More on that, plus G4's history, is after the jump.

Any vision of whether or not it would heavily feature footage from WWE's huge library of old wrestling is constantly changing.  The most definite idea is that would likely feature the WWE shows that the company doesn't have clearances for in the U.S. (Superstars, NXT, Vintage Collection, and a variety of recap shows that might not show up on a hypothetical network) and serve as a backup if they ever lost another clearance.  They're also having trouble getting cable companies to agree to pick up the WWE Network.

The new company plan is to spend money, taking out loans if they have to.  They already have a relationship with Comcast, which has taken over NBC Universal, the parent company of their American TV outlets (USA Network, Syfy, Telemundo, Mun2, and NBC for annual specials).  Recently, Tough Enough aired in various slots on almost every cable network owned by Comcast, including G4.

With the UFC negotiations being in the early stage and WWE silently at war with them, is there any chance that WWE could try to buy G4?  I really don't know.  According to the company's latest filings, they have just under $410 million in assets.  Just under $80 million is property and equipment.  We know they're willing to take out loans, but that would be one huge purchase.  That said, if they want to keep the project going as is, they probably will have to buy an existing cable network.  If they're going to buy an existing cable network, G4 makes sense demographically and has reasonable penetration.  WWE is also looking into expanding their online efforts to be available on set-top boxes in addition to or instead of a cable network.  They already have an online WWE Classics service in addition to the WWE Classics On Demand subscription service on cable TV systems, but it's only available on Windows PCs.

As far as G4 goes, I would guess they're profitable as their programming largely consists of inexpensive syndicated and in-house shows.  That said, this may be me being insular but I don't think I've ever talked to anyone who liked anything on the network, at least in it's modern, most well known form.  Early on in 2002, when it was built around what you'd expect from a video game network and aired old episodes of the game show Starcade, all I heard was that the few people who liked it felt that way because of Starcade nostalgia.  Two years later, G4 was stagnant and needed clearances.  Comcast bought TechTV (which was available in 43 million households at its peak) from Paul Allen's Vulcan Inc. and merged the two networks into G4TechTV.  To say this didn't go over well with some people would be an understatement.

Comcast had been planning this from the beginning.  After G4 launched, they dropped TechTV to put more focus on G4 and devalue their sort of competitor.  When they bought TechTV, 250 employees were fired and any of the remaining 100 or so who wanted to stick around had to move from San Francisco to Los Angeles.  Most of TechTV's shows were quickly cancelled as the channels were merged.

The remaining two shows noticeably became more shallow, especially TechTV flagship show "The Screen Savers."  Renamed "Attack of the Show," it lost its technology focus and became a general entertainment show.  At the time, new co-host Kevin Pereira lashed out at fans online when they criticized the format change.  He has since said he that he feels that the transition was mishandled, mentioning in a G4 chat that "In hindsite, a lot of trouble could have been avoided had the show gone dark for a while and relaunched without trying to cater to both audiences." It wasn't long before all of the show's surviving on-camera talent was gone.

As the show changed, it was often criticized for being lowbrow, especially in its usage of co-host Olivia Munn.    To quote the entry about Munn in the page on the (addictive) TV Tropes wiki about "Ms. Fanservice" types on live action TV shows: "Olivia Munn, co-host of Attack of the Show is frequently shown wearing revealing outfits and fetish costumes such as Wonder Woman.  In one episode, she dressed as a French maid and jumped into a vat of pudding."

Video game show "X Play" (formerly "Extended Play") and hosts ("Screen Savers" export) Morgan Webb and ZDTV original Adam Sessler) also survived the merger.  While the show has gone through various format changes (including a long stretch with skits that didn't always suit the strengths of the hosts, who came off better on "serious" broadcasts), it's still running strong as "the other" flagship show on the network.

The network itself eventually re-branded as a shallow "gamer lifestyle" channel before moving into being a SpikeTV-esque "channel for men" when the "gamer lifestyle" branding didn't work.  Much of the day, reruns of "Cops" and "Campus PD" TV fill airtime, while "Cheaters" reruns are in a similar role in late night slots.  It what could be a sign of why G4 is perceived the way it is by some people, the "Cheaters" episodes have redone voiceovers that differ from the originals.  They're done by a younger voice actor who always refers to the woman involved in the story as "this chick," for example.

From comments that they've made, it seems like many TechTV employees who stuck around at first and left later were not fans of the experience.  Former TechTV hosts and producers are all over the webcasts on The TWiT Network and Revision3, though the latter has some G4 in it. For example, flagship show "DiggNation" consists of founder Kevin Rose and his short-lived G4 Screen Savers co-host Alex Albrecht drinking heavily while hosting an infomercial for checking out stories on Digg, Rose's (well, until he resigned a few months ago) social bookmarking site.  There are plenty of good shows there (with "Tekzilla" being the closest thing to a spiritual successor to "The Screen Savers,"), but it's not focused on technology, and thus TWiT is the proper heir to TechTV's throne.  A new studio is being built for TWiT (which is currently run out of a small cottage in Petaluma, California) with the goal of an overhaul into a more TV network style format patterned after their old home at TechTV.

Corrections and such: The TechTV -> G4 transition passage has been edited to remove a reference to G4 ordering former "Attack of the Show" co-host Sarah Lane to dye her hair (which I had seen mentioned on a recent TWiT Network broadcast but was refuted by Lane when she was made aware of this article.  The line about Kevin Pereira's reaction to negative comments about the Screen Savers -> Attack of the Show changeover has been edited to clarify that he posted them at the time of the switch and has since said that the switch could have been handled better.  In addition, content that better explained the criticism of "Attack of the Show"  which was lost during a browser crash (between auto-save drafts) during the writing of the original post has been effectively restored.  While editing the post, I figured that if I was clarifying things, I might as well add some details to the descriptions of X-Play and the most recent change in network branding to better explain them.