NEW YORK — When Family Channel’s parent, Intl. Family Entertainment, agreed to be acquired by Fox Kids Worldwide two weeks ago, it was the culmination of an 18-month-long process, documents filed with the SEC Wednesday revealed.
Almost one year ago, in mid-July 1996, IFE decided News Corp. was the most likely potential buyer, through the Fox Kids joint venture News Corp. had only recently formed with Saban Entertainment, the filing says.
In an information statement filed with the SEC on the deal, IFE also revealed that its chairman, Pat Robertson, signed a five-year contract to act as a $400,000-a-year consultant to the company as a condition of the sale. While Robertson’s son Tim, who is CEO of IFE, is “anticipated” to stay on in that role, the companies say, the document contains no mention of this being written into the contract.
Another condition of the sale was that cable giant Tele-Communications Inc., an affiliate of IFE shareholder Liberty Media, amend its carriage agreement with Family to provide for “specified guarantees as to carriage” of the network, the document said.
Liberty played a major role in long-running negotiations on the sale, the document shows, because it had a first right of refusal on buying the supervoting stock controlled by the Robertson family.
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IFE’s senior management first began considering a potential sale of the company in January last year in discussions with its adviser, Goldman Sachs, the statement says. One of the first companies to be identified as a potential buyer was News Corp., because its chairman Rupert Murdoch contacted IFE chairman Robertson to express interest in investing in the Family Channel.
By July, IFE had picked News Corp. to pursue a deal, but negotiations dragged on until this month. For most of that time, and as reported extensively in the press, IFE and News Corp. had agreed that public shareholders would get as little as $20 a share.
By contrast, the filing says Murdoch and Robertson agreed in a telephone conversation in mid-February that the Robertson holdings would get paid out after the deal at a price of $70 a share. It was only when that part of the deal surfaced in the press in May that the Robertsons changed their mind and decided all shareholders should get the same price.
By that time two other bidders had appeared on the scene. The document doesn’t identify them, but they were believed to be Walt Disney Co. and Viacom Inc. In late May, the Robertsons told all bidders they would take the “first unconditional proposal” of $35 a share.
This price prompted one of the bidders, believed to be Viacom, to pull out. Disney eventually also pulled out because of difficulties in reaching an agreement with the Christian Broadcasting Network — an affiliate of the Robertsons — and Liberty.
But the document also confirms that News Corp. delayed finalizing the deal for nine days — from June 2, when IFE wanted to sign the contract, to June 11, when News Corp. finally said it could make an unconditional proposal. Not by coincidence, News Corp. finalized its sat TV deal with Primestar Partners June 11, a deal people close to the situation say was a condition for Murdoch going ahead with the IFE deal.