Current TV co-founders Al Gore and Joel Hyatt say that Al Jazeera is withholding millions of dollars in an escrow fund from the sale of the TV channel “as a reservoir from which to pull money to buy favor with its distributors.”
A redacted version of their lawsuit, filed last week and made available on Thursday, paints a picture of Al Jazeera as struggling to gain distribution in the U.S. until Gore and Hyatt agreed to sell Current TV, available to more than 50 million subscribers. After buying the network for a reported $500 million, Al Jazeera revamped Current TV into Al Jazeera America, which launched in August 2013.
Since then, however, Gore and Hyatt contend that Al Jazeera has used the “underhanded tactic” of using the balance of tens of millions of dollars left in escrow to try to win over distributors to carry the channel. Gore and Hyatt, who launched Current in 2005, are challenging a series of claims that Al Jazeera has made against the escrow account, which they say was set up for indemnification of Current TV partners in legal disputes through July 2.
Their suit includes claims of breach of contract and fraud, but many details are still redacted. Boies has filed a challenge to Al Jazeera’s redactions and has called on the court to unseal them.
“The complaint is about Al Jazeera making excuses for avoiding its financial obligations,” said David Boies, who is representing Gore and Hyatt. “When our remaining allegations are unsealed, as we are requesting, the extent of Al Jazeera’s commercial misconduct will become clearer.”
Earlier this week, the network called Gore and Hyatt’s claims of fraud “blatantly false.” A spokeswoman for Al Jazeera said on Tuesday, “The plaintiffs and we have asked for certain portions of the complaint that deal with confidential business practices to be maintained under seal. The filed public version of the complaint reflects both parties’ redactions. The court will rule on whether the redactions should be maintained. Until that time, we will have no further comment on this issue.”
Among other things, Gore and Hyatt contend that Al Jazeera is claiming expenses related to the termination of an agreement with Time Warner Cable to have the option to carry Al Jazeera English, which Al Jazeera sought for U.S. carriage before launching Al Jazeera America. But that agreement, their lawsuit states, was essentially worthless because Time Warner Cable had no obligation to carry the channel or pay Al Jazeera for it, nor did it ever pick it up. Moreover, the expenses weren’t even related to the termination of the Time Warner Cable agreement, their suit states.
Gore and Hyatt also contend that Al Jazeera is claiming damages and expenses for separate disputes with Dish Network, DirecTV and AT&T. But under the terms of the merger agreement, their lawsuit claims, Al Jazeera was required to notify Hyatt of the disputes, and even give him control of the defense of them, but it never did.
They also say the merger agreement does not allow Al Jazeera to recover damages it incurred in settling a dispute with CBS over a newsfeed licensing with Current TV. Gore and Hyatt claim that Al Jazeera was notified of the dispute before it bought Current.
The redacted lawsuit also claims the Gore and Hyatt had “serious reservations” about selling Current Media to Al Jazeera, but after due diligence and consulting with former U.S. government officials, they decided to meet to discuss a sale.
Gore and Hyatt “concluded that AJ’s large-scale entrance into the United States mass media marketplace would likely result in a significant improvement of its journalism not just in the United States, but across its global properties in the Middle East and elsewhere, which in turn would help foster deeper mutual understandings between the United States and the Arab world,” the lawsuit stated.