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The Cost of a Premium Cable TV Channel?

total investedHow much does it cost to start up a premium cable channel assuming you already have a library of programming to show? Apparently $110m to $150m is a good start.

Last April, in a surprise announcement, Lions Gate, Viacom (Paramount) and MGM announced plans to launch their own premium cable channel.  Soon after, Business Week reported former Showtime exec Mark Greenberg was set to take the helm.  Besides those two tidbits of information, there’s been much speculation but limited detail.  A new SEC filing, however, adds a little bit more.

In a 10-Q filed for the quarter ended September 30th Lions Gate disclosed they’ve invested $8.6 million so far.    (Ed. Note: Technically, Lions Gate has invested more.  The company is recording their joint venture participation with a one quarter lag. Even so, the number is still a valuable detail).

With Lions Gate holding a confirmed 28.57% stake in the venture, MGM holding another 28.57% and Viacom presumed to be carrying the remainder, that $8.6m multiplied through  (assuming all have contributed a proportional investment to ownership interest) means total contributions are about $33.6m.

The Lions Gate 10-Q further reveals the company has “a mandatory commitment of $31.4m increasing to $42.9m if certain performance targets are met.” 

Those totals multiplied through, again assuming ownership interests match directly to investment contribution, the disclosures would mean the total allocation contractually pledged will be in the range of $109.9m to $150.2m.

$110 to $150 million rounded out. That’s the going rate to get a cable channel off the ground.  Programming not included.

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