Saban, Execs Deny Fox Familys on Block6/25/2000 8:00 PM Eastern
Top officials at News Corp. and Saban Entertainment last week denied published reports that they were shopping around their joint venture, Fox Family Worldwide Inc., parent of Fox Family Channel.
Haim Saban, chairman of Fox Family Worldwide, and Chase Carey, chief operating officer of News Corp. and chairman of Fox Television, said they both remained committed to the partnership, contrary to a story last Thursday in The Wall Street Journal that said they had tried to sell the unit for $4 billion. One of the potential buyers approached, according to the story, was USA Networks Inc.
"We build these businesses, we don't sell them," Carey said. "We did not shop the company. Our focus is on working together to build this business."
Added Saban: "This business is not for sale. Not now, not ever ... I believe in the partnership. And you heard Chase say the same thing with different words."
Saban also denied that he was looking to sell his 49.5 percent stake in the partnership to News Corp. He said he had the right to "put," or sell his shares to News Corp., beginning this month, but he added, "I'm not doing it."
But speculation that Saban would sell out to News Corp. has been rampant in the cable industry.
And last Friday, one day after the Journal story, the Los Angeles Times reported that Saban had wanted to sell his stake, but he and News Corp. chairman Rupert Murdoch couldn't agree on a price, with Saban estimating Fox Family's worth at $6 billion and Murdoch putting it at $4 billion to $5 billion. The Times reported that both sides agreed to a cooling-off period of two to six months, after which they would readdress the issue.
Fox Family Worldwide bought Family Channel parent International Family Entertainment Inc. for $1.9 billion in 1997. In August 1998, the network was relaunched as Fox Family Channel. The programming strategy was to target kids and teens during the day and young contemporary families at night.
But the programming transition has been difficult. The revamped Fox Family-which also launched two digital networks aimed at boys and girls-has drawn a younger audience. But overall viewership is significantly down. In primetime, the network is still struggling to craft an identity.
Saban said the network is on an upswing. "In the past three weeks, with our new shows, our acquisitions, we are turning the corner," he added. "Kids are up in triple-digits. Everything is hunky-dory, and to do that in two years is a remarkable achievement."
According to Carey, Fox Family is where News Corp. expected it to be at this point.
"We knew we were making significant changes a couple of years ago," he said "These things take time. There is a lead time to buying programming and making things happen. So we are sanguine about where it is.It has grown. But it's got a long way to go before it fulfills potential."
Last May, reports first surfaced that Murdoch, unsatisfied by Fox Family's ratings performance, was looking to buy out Saban's stake for $1.8 billion. At that time, Saban denied those reports.
Then last fall, Fox Family Worldwide had to take a $125 million loan from Fox Broadcasting Co. in order to avoid technical default on its loans.
Fox Family has recently been rocked by management changes. In May, network president Rich Cronin abruptly left. Weeks later, ad-sales president Rick Sirvaitis and senior vice president of marketing Tom Lucas followed him out the door.
One Wall Street analyst said he doubted that News Corp. and Saban would be ready to dump an asset as valuable as the widely distributed Fox Family Channel.
"[Fox Family] fits in very well with their stable of businesses," said Alan Mnuchin, co-head of Lehman Bros. Inc.'s Global Media Investment Banking Group. "They have fairly good penetration with the cable networks and a great international business."
Mnuchin added: "They haven't got the programming format right yet, but they continue to work hard to get it right ... They have a sound strategy. It's very hard to execute the rebranding and reprogramming of a channel. There is no reason to believe that anybody has lost hope in it."
The cable channel is still undergoing change. Last week, Fox Family Channel's programming department was restructured to also include Fox Kids Network, a children's program block on the Fox broadcast network.
As part of that reorganization of daytime programming, Brian Casentini was promoted to the post of vice president of current programming for both Fox Family and Fox Kids. Most recently, Casentini served as director of programming and development for Fox Family.
Mike Farrell contributed to this report.