Although reruns of "The Simpsons" have been on local television stations for two decades, contractual restrictions prohibited 20th Century Fox Television, the studio that makes the hit cartoon, from selling reruns to a cable network as well.
However, the studio was able to negotiate new deals with the stations that had rerun rights that removed the exclusivity portion, clearing the way for a cable sale. As part of the agreement FX Networks, the parent of FXX, also acquired online streaming and video-on-demand rights to "The Simpsons."
Both 20th Century Fox Television and FX Networks are units of Rupert Murdoch's media giant 21st Century Fox.
While terms of the sale were not disclosed, FX Networks and 20 Century Fox Television said there was a "vigorous bidding war" and that this rerun sale is believed to be the biggest ever.
When 20th Century Fox Television was first floating the idea of a cable sale, there was speculation that the per-episode price could be around $1.5 million for a total sale price that would climb to close to $800 million.
That figure was dismissed as far too high by others familiar with the pact who were bound by confidentiality agreements from discussing details. Given the sheer number of episodes FXX purchased, even if the price tag were $750,000 per episode, that would translate to roughly $400 million. "The Simpsons" will be available to FXX in August 2014.
For FXX, which launched in September, having reruns of "The Simpsons" could give it a big boost. Created as a companion channel to FX, it has yet to establish itself with viewers and its ratings are very small.
Other media companies that looked at "The Simpsons," according to people close to the matter, include Viacom, parent of Comedy Central, Nickelodeon and TV Land, and NBCUniversal, whose cable holdings include USA Network and Time Warner, which owns TBS and Cartoon Network. While there was strong interest from some of the bidders, there was also concern about having to buy so many episodes of the show and that many of the reruns had already been overexposed from their years on local television stations.
Some of those rival bidders assumed all along that "The Simpsons" deal would end up staying within 21st Century Fox. Still, it was important that 20th Century Fox Television shop the show because otherwise it could be vulnerable to accusations from producers and profit participants that it cut a sweetheart deal with a sister company.
"The Simpsons," which is in its 25th season on Fox, is already a huge cash cow for 21st Century Fox. The value of the rerun sales to local TV stations has long surpassed $1 billion, as have DVD sales of the show and "The Simpsons" movie.
Follow Joe Flint on Twitter @JBFlint.