NEW YORK — Fearing that a reconfigured service would pose a serious threat to CNN and other Turner Broadcasting System services, Ted Turner has vetoed the sale of Time Warner’s one-third stake in Court TV to Discovery Communications.
Although several Time Warner executives, including chairman Gerald Levin, are known to be in favor of selling Court TV to Discovery, Turner believes Court TV will compete against CNN if it’s in the hands of a competing media company.
Sources also said Turner was upset that he hadn’t been informed of Discovery’s bid for Court TV until he read about it in a trade publication.
Discovery last week emerged as the surprise leading suitor for Court TV when it offered to buy a majority stake of the cable network, which it valued at about $350 million (Daily Variety, May 7). Discovery’s bid knocked the former leading candidate to buy Court TV, Evercore Partners, out of the picture.
Evercore, led by NBC executive VP Tom Rogers, had offered $300 million for the lion’s share of Court TV, and — until Discovery’s bid — was expected to close its deal to buy the trial channel in three weeks.
Evercore had been unwilling to increase its bid, sources said, but was waiting on the sidelines to see whether Discovery’s deal went through.
Discovery had planned to buy Time Warner’s one-third stake in Court TV and also Liberty Media Corp.’s one-third ownership position. NBC had been expected to keep a stake somewhat smaller than its current one-third stake.
Turner may have been right to worry.
Discovery, headed by founder and chairman John Hendricks and 49% owned by Liberty Media, was considering gutting Court TV’s legal programming content and using the channel’s 33 million subscribers to launch one of its new channels.
Discovery has either launched or has plans to launch six new services: Discovery Kids, Discovery Civilization, Discovery Science, Discovery Home and Leisure, Discovery Health and Discovery Wings.
Even if the deal had gone through as planned, Court TV cable system affiliates have contracts that specify the network’s programming will consist of live trials and other related court programming. If Discovery or any other buyer were to change Court TV’s programming, its affiliates would have the legal right to drop the channel.
Court TV’s three partners have argued about how the network should be run and how its ownership should change for years. The network has also suffered from a shortage of cash as Liberty Media failed for years to fund capital calls it was required to make.
Turner last year helped squelch a deal to sell Time Warner’s interest in Court TV to its founder, Steven Brill. Then, as now, Turner feared the network would become a competitor.
Partly out of frustration of trying to please three masters, Brill finally sold his interest in Court TV in February 1997.
A Time Warner representative declined to comment. Discovery could not be reached for comment late Tuesday.
(Dow Jones News Service contributed to this report.)