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Time Warner, Liberty Media Work Out Details for Court TV Deal

Posted on: Monday, 15 May 2006, 12:05 CDT

By Scott Leith, The Atlanta Journal-Constitution

May 13--Time Warner and Liberty Media spent this week hammering out a deal for cable network Court TV.

Will an agreement they've been discussing about the Atlanta Braves be next?

On Friday, the companies confirmed that Time Warner has bought Liberty's share of Courtroom Television Network for $735 million.

Until now, Courtroom Television -- owner of cable network Court TV -- has been a joint venture of Time Warner and Liberty. Now Time Warner's Turner Broadcasting System will run Court TV as part of a portfolio of networks that includes TNT, TBS, CNN, Cartoon Network and Turner Classic Movies.

Court TV will continue to be based in New York, although some behind-the-scenes functions will be pulled into Turner Broadcasting's headquarters in Atlanta.

"This is a milestone for both Turner Broadcasting and Court TV," said Phil Kent, Turner Broadcasting chairman and chief executive. "Our entire focus, from this day forward, is to make an already terrific enterprise even stronger."

Discussions over Court TV have been separate from talks that could lead to a change in ownership of the Atlanta Braves, which operate under the Turner Broadcasting umbrella. Negotiations on that front are far more complex than the situation involving Court TV.

Kent echoed recent comments from Time Warner and Liberty executives on Friday, saying discussions are ongoing.

"There is a lot of energy behind it," he said. "And that's all I can really say."

For Turner Broadcasting, Court TV serves as a replacement of sorts for regional cable network Turner South, which recently was sold to Fox Cable Networks for $375 million. Turner South had been losing money, including $7 million last year. By adding Court TV, Turner Broadcasting gets a profitable asset with better prospects.

Court TV is available in about 86 million homes. According to Liberty's annual report, Court TV generated $255 million in revenues in 2005, up about 12 percent. Operating cash flow was $57 million, up 9.6 percent.

"Court TV will make Turner stronger, and Turner will make Court TV stronger," said Mark Lazarus, president of Turner's entertainment group, which will house the network.

Court TV's major stars include Catherine Crier and Nancy Grace, who also hosts a popular program on CNN Headline News. During daytime hours, Court TV airs trials and news. In the evening, the network switches to entertainment, including original series such as "Forensic Files."

Court TV's other operations include TheSmokingGun.com, which was acquired in 2000. The site specializes in exposing public documents, such as those on celebrity arrests.

Until now, Turner Broadcasting has built networks from scratch, so absorbing an existing operation is a departure.

"We are a company of varied cultures," Lazarus said. "The CNN culture is very different from the TNT and TBS culture. ... It's important that we have different points of view at our corporate table."

Changes are ahead, however. Henry Schleiff, who arrived at Court TV in 1998 and was heralded for leading a turnaround, will step down as chairman and CEO. He'll stay for a six-month transition period, serving as non-executive chairman.

Kent and Lazarus praised Schleiff. So did Jeff Bewkes, Time Warner's president and chief operating officer, who said Schleiff provided "keen vision and inspired leadership."

In a prepared statement, Schleiff said he was proud of Court TV's growth during his tenure, including in the value of the network itself, which he said climbed from $300 million to nearly $1.5 billion today. He'll get a payout based on his deal with the network.

"I am proudest, most of all, of having helped to create a unique culture of importance and fun and, indeed, a network which not only makes a profit but also makes a difference," Schleiff said.

Art Bell, Court TV's president and chief operating officer, will stay in his job. Court TV has about 450 employees, but some people are likely to lose jobs as certain duties are shifted within Turner.

With the Court TV deal resolved, attention will now focus on Time Warner's discussions about Liberty and the Braves.

Colorado-based Liberty controls about 171 million shares of Time Warner stock. To dispose of much of that stake, Liberty could send about 100 million shares to Time Warner in exchange for cash and the Braves.

Such a deal would be valued at about $1.75 billion, based on Time Warner's closing stock price Friday.

Time Warner put the Braves up for sale in December. After extensive talks with Atlanta Falcons owner Arthur Blank and other local bidders, Time Warner last month zeroed in on a potential deal with Liberty, partly due to significant tax advantages.

Kent said the Court TV transaction closed by the time of Friday's announcement. There are far different dynamics involved in selling the Braves, however, because Major League Baseball's approval -- often a two-month process -- will be required between the announcement of a deal and closing.

Some have questioned why Liberty wants a baseball team. On Thursday, during a meeting with analysts and investors, Liberty Chairman John Malone said the best deals involve assets with good fits for the company's existing businesses.

While the Braves don't fall into that category for Liberty, Malone suggested such a transaction could still work, given the company's overall goal of shedding Time Warner shares.

Staff writer Tim Tucker contributed to this article.

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Source: The Atlanta Journal and Constitution

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