NBC has agreed to buy the U.S. Bravo cable entertainment network from Cablevision Systems Corp. in a $1.25-billion cash and stock deal expected to expand the network's cable presence and shore up Cablevision's finances.

The deal, announced Monday, helps reduce debt at Cablevision, which has been under increasing pressure to improve its balance sheet.

In return for its position in Bravo, Cablevision will receive about $1 billion in stock - between $400 million and $500 million from NBC's parent General Electric Co. and 53.2 million shares of Cablevision Class A common stock, now held by NBC.

Canada's Bravo cable channel has different owners.

NBC had a significant stake in Cablevision's Rainbow Media Group subsidiary, which owned U.S. Bravo. When the transaction is complete, NBC will no longer have any holdings in Cablevision or any of its subsidiaries.

Cablevision has an 80 per cent stake in Bravo; the remaining 20 per cent is owned by Metro-Goldwyn-Mayer Inc. NBC will pay $250 million cash for MGM's Bravo stake.

Wall Street appeared to approve of the deal. In morning trading on the New York Stock Exchange, shares of Cablevision surged $1.31, or 13 per cent, to $11.40 US, while MGM shares advanced 92 cents to $13.72. GE was up 77 cents at $26.77.

By structuring the deal to involve stock transfers, Cablevision can limit its tax liability while still improving its balance sheet. The Cablevision shares owned by NBC accounted for about 16 per cent of Cablevision's common stock.

"This is a good first step in trying to simplify the company's structure," said Alan Bezoza, cable systems and equipment analyst at CIBC World Markets. "We would have liked to see more cash involved in the transaction, but we think there is more to come with respect to more asset sales at Cablevision."

The acquisition of U.S. Bravo gives NBC a third national cable property. It already owns MSNBC and CNBC, in addition to minority stakes in ValueVision (ShopNBC), the A&E Network and the History Channel. Bravo reaches more than 68 million households in the United States.

Although Bravo is scheduled to start airing reruns of West Wing, that syndication deal was done before the NBC acquisition, and NBC executives say they don't expect to use Bravo as an outlet for most of NBC's current programming. NBC says plans are being made to develop original NBC/Bravo crossover projects, including reality shows, new series and specials.

"There a lot of people out there producing independent work that we can't put on our network right now because it doesn't fit with the programming or there's not room in the schedule," Bob Wright, chief executive of NBC.

"A lot of that work could be done for Bravo. I think it's a great place to work with new talent, concepts and ideas."