Content

Order in the Court: Deal Done

5/12/2006 6:40 AM Eastern

Time Warner Inc. finally pulled the trigger on its much-anticipated acquisition of the interest in Court TV it didn’t already own, plunking down about $735 million in cash for Liberty Media Corp.’s 50% of the cable network.

The deal, which has been hotly anticipated for weeks, valued Court TV at just under $1.5 billion. While Time Warner executives would not comment on how that figure was reached, the price appears to be about 22 times Court TV’s estimated 2006 cash flow -- in line with recent network sales.

Time Warner has had the right to force Liberty to sell its interest in the network since January.

As first reported by Multichannel News, Court TV will be folded into the entertainment division of Time Warner’s Turner Broadcasting System Inc. unit, headed by division president Mark Lazarus. Court TV chairman and CEO Henry Schleiff will step down from that role, becoming the network’s nonexecutive chairman for six months.

On the conference call, TBS chairman and CEO Phil Kent said it was too early to tell if any layoffs will result from the deal.

While the fates of the rest of Court TV’s management are not fully known, during a conference call, it was said that president and chief operating officer Art Bell and Marc Juris, general manager of programming and marketing, would remain with the company, and that Bell will play virtually the same role under the new ownership.

“Art Bell is going to stay on and do substantially a lot of what he has been doing,” Kent said. “There are a few functions that were reporting to Art that will become part of Turner’s corporate infrastructure area, like [human resources] would be an example of that, also corporate communications. But in terms of the parts of the network most directly tied to what people see on-air, the look and feel of the programming, the marketing, creative services, all of that, all of the programming, 24 hours, is all going to continue be under Art, and we’re thrilled that he’s staying on to work with Mark in this transition.”

Court TV’s headquarters will also remain in New York. While Lazarus said some functions could become part of Turner’s structure in Atlanta, the “intention” is for “the vast majority of Court TV to remain in New York.”

Lazarus said there are no plans to change the format of Court TV -- it will continue to offer news during the day and entertainment in the evenings.

“We’ll be working very closely with CNN and some designated CNN executives who will work very closely with me under the direction of Jim Walton, who runs CNN, in working with the news group and the daytime group here at Court TV,” Lazarus said.

“While it’s rolling up under the entertainment group, we’re not going to lose the roots of that programming and the value that programming brings to this network,” he added.

Kent said it made sense for Court TV to be integrated into the entertainment group, relative to similarities in “programming, revenue contribution and where we felt the marketing would be more complementary.”

Asked about the potential of moving some acquired fare from other Turner networks to Court TV, Lazarus replied that Court TV would be part of the programming decisions Turner makes “for all of our businesses going forward. Nothing is earmarked, but we’re not ruling anything out. We want to make our marketing and cross-promotion work for all of our businesses and maximize our GRPs [gross ratings points].”

Relative to the advertising upfront, Lazarus said Court TV’s sales team, headed by executive vice president of ad sales Charlie Collier, would work together with Turner’s group, led by Turner Entertainment Ad Sales and Marketing president David Levy, in “going client-by-client, the best way to get them to invest in our products.”

During the conference call, Lazarus also talked up “RED,” Court TV’s weeknight 8 p.m.-9 p.m. action strip, as “having appeal to advertisers and viewers.”

Queried about Web site The Smoking Gun (www.thesmokinggun.com), he said: “We’re very excited about that part of the business coming into Turner.”

Kent also noted that Schlieff, whom he has been friends with for two decades, will serve as a consultant to him during the transition period. He will continue to be involved in public-affairs initiatives where he has already taken a leading role, including efforts to gain access for cameras in state and federal courts.

In a prepared statement, Schleiff said he was proud to have overseen the growth in the network’s value from $300 million when he first started to $1.5 billion today.

Schleiff’s contract reportedly gives him a percentage of the increase in value during his tenure. Given that the increase has been $1.2 billion, even if the contract calls for a 1% cut, it could put as much as $12 million in the former chairman’s pocket.

November

Next TV

Affinia Manhattan, New York, NY