Entertainment Industry

Category: Hearst

Comcast looking to unload its stake in A&E Television Networks

"The Client List"

Comcast Corp. has put the wheels in motion to sell the bulk of its small but valuable stake in A&E Television Networks whose holdings include cable channels A&E, History and Lifetime.

In a filing at the Securities and Exchange Commission, Comcast said its programming unit NBCUniversal had exercised an option to unload a "substantial portion" of its interest in A&E Television Networks to Walt Disney Co. and Hearst Corp., the other partners in the venture. Comcast has put the worth of its 15% stake in A&E Television Networks at $2 billion. Disney and Hearst each own 42.5% of the company.

The move is not surprising as NBCUniversal had to eventually sell its piece of A&E Television Networks. In 2009, NBC had owned 25% of A&E Networks. However, that stake shrank by almost half when Disney and Hearst Corp. -- co-owners of Lifetime Television and its sister channels -- merged those networks into A&E Networks. When that agreement was reached, part of the deal called for NBC to exit the partnership within 15 years.

In its filing, Comcast said it expected an agreement to be reached on the value of its equity interest during the second half of this year.


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--Joe Flint

Photo: A billboard for Lifetime's new show "The Client List." Credit: Lifetime

$4-million judgment upheld in lawsuit against A&E Television

A South Carolina investor has prevailed in his nearly five-year legal battle against A&E Television Networks over the origin of the once-hot show "Flip This House."

A federal appeals court this week upheld a lower-court ruling that A&E must pay slightly more than $4 million to real estate investor Richard Davis for his share of profits from the show. A&E had appealed the 2008 ruling and was seeking a new trial.

Davis sued New York-based A&E -- owned by Hearst Corp., Walt Disney Co. and NBCUniversal -- in 2006, alleging that executives of the cable channel reneged on their promise to pay him half of the profits from the program. Davis, in 2004, came up with the concept for a show about house flipping. 

Although there was no written contract, Davis contended that A&E agreed to split the show's revenues 50-50 -- an unusually high percentage for the TV industry.

"Flip This House" debuted in 2005 at the height of the housing boom. The inaugural season featured the feisty Davis and sidekick Ginger buying and fixing up properties. The show, along with the real estate market, ran out of steam and was canceled in 2009.

Although the courts determined that A&E should have put the agreement in writing, they said an oral agreement was enforceable.

The $4-million award was roughly half the revenue generated by the show during its first season. Davis and A&E had a falling-out after the first season, and the network brought in a new team of real estate agents to continue the show's production. Davis, 47, was not paid for his role in the show. 

"I'm tickled to death that I stuck with my case," Davis said Tuesday in a telephone interview. "It was a matter of principle. The show was my idea, I created it, and they stole it. But I'm not bitter anymore."

An A&E spokesman declined to comment.

-- Meg James


Hearst forms TV partnership with reality producer Mark Burnett

Hearst Corp. and the producer of such popular reality shows as “The Apprentice” and “Survivor” announced a 50/50 joint venture Monday that will charge Burnett with the task of creating television shows for the media giant. Hearst owns more than two dozen TV stations, stakes in cable TV networks Lifetime, A&E, History Channel and ESPN as well as newspapers and magazines.

“We were not looking to be in the television production business,” Scott Sassa, president of Hearst Entertainment & Syndication, said in an interview. “But no one is sure how technology will play out or what devices will ultimately win. The one thing that is certain is: Good content will continue to be critically important no matter what’s on the screen.”

Burnett's existing television productions -- with the exceptions of his two biggest hits, “Survivor” and “The Apprentice” -- will be folded into the unnamed venture, including his latest high-stakes bet, “The Voice,” a competitive singing talent show that debuts on NBC this month. Terms were not disclosed.

The British-born producer had been trying to sell his company for several years, particularly as he struggled to develop a new blockbuster hit. Unlike successful dramas and comedies, which earn millions of dollars of profits in reruns, reality shows have little financial life beyond their initial TV airings. Thus, reality show producers constantly try to come up with the next big hit.

“I’m not exactly missing any meals,” said Burnett, who at times has been one of the highest-paid producers in television. “Strategically, this was a good move for me because Hearst has great brands and a deep bench of experience.”

Burnett plans to develop shows that are extensions of Hearst’s various properties, including its Good Housekeeping, Esquire and Marie Claire magazines.

“Those could be very useful. I’m looking for that next act in my career,” said Burnett, 50. “And Hearst provides a big burst of energy and the ability for me to work with new people.” 

In recent years, the financial upside for reality shows has been selling their format to foreign networks so they can adapt the program for local audiences. Burnett has often relied on other TV companies to sell his shows abroad, a role that Hearst is expected to fulfill on new shows.

Teaming up with Burnett makes sense, Sassa said, because the growth in television has been in the nonfiction side of the TV business. Cable networks such as History and Bravo have achieved ratings gains with unscripted shows such as “Pawn Stars” and “The Real Housewives of Beverly Hills.”

Another goal of the partnership with Burnett is to create shows that dovetail with other Hearst projects or that can be extended to digital platforms, including the Internet, Sassa said.

Burnett has teamed up with several big names, including Martha Stewart and Sarah Palin. He recently produced "Sarah Palin's Alaska" for TLC.

-- Meg James

Photo: Mark Burnett. Credit: Brian Vander Brug / Los Angeles Times

Life decisions as Lifetime is merged into A&E Networks

Senior executives and staff are on pins and needles at Lifetime Television and A&E Networks these days. Now that the deal to merge Lifetime and its sister channels into A&E Networks has closed, the brass at A&E (which stands for Arts & Entertainment) has started the unpleasant task of figuring out who's staying and who's going at their various channels. 

RAVEN Exits -- either voluntary or forced -- were expected when the deal was announced last summer. Even the press release detailing the sale said combining the channels into one entity would "yield substantial cost efficiencies." While A&E is offering some senior staff the option to stay on, that does not guarantee the same position or salary, people familiar with situation said. In other words, the lawyers are working overtime figuring out exit packages. The cuts could be as much as 10% of the 1,100 staffers.

Still to be determined is how Lifetime CEO Andrea Wong's management duties will change. Before the merger, she reported to a board of executives from Lifetime's parent companies, Walt Disney Co. and Hearst Corp. Under the new ownership, which brought NBC Universal into the mix with Disney and Hearst, Wong now reports to A&E TV Networks CEO Abbe Raven. There is talk that while programming and marketing will continue to report to Wong, other business units at Lifetime including sales, affiliate relations, legal, human resources and public relations will report to Raven and her team.

WONG Industry watchers are curious to see if Wong and Raven can coexist. Wong, a flashy executive and MIT graduate with close ties to Disney CEO Bob Iger and TV co-chief Anne Sweeney, has been at Lifetime for a little over two years. Before that she oversaw alternative programming for ABC. Raven, who keeps a lower profile, has quietly risen through the ranks of A&E to become one of the most powerful executives in the cable industry.

So far, the biggest name opting to leave Lifetime is Patricia Langer, the executive vice president of the network's legal, business and human resources units. Chief Financial Officer Jim Wesley may also leave the network in the next few months. Expected to stay on are marketing chiefs Bob Bibb and Lew Goldstein, and JoAnn Alfano, the well-regarded executive vice president of programming there.

For Lifetime, the changes come as the channel has looked to build its audience with more original programming and an expensive acquisition in "Project Runway." The track record so far is mixed. "Drop Dead Diva" has turned into a surprise hit for the network, but "Project Runway," which Lifetime snagged from Bravo in an ugly legal battle, has seen its ratings take a fall after a strong premiere.

-- Joe Flint

Photos: Top right: Abbe Raven. Credit: A&E Networks. Bottom left: Andrea Wong. Credit: Carolyn Cole / Los Angeles Times

Disney, Hearst, NBC strike complex deal to simplify cable ownership

Walt Disney Co., General Electric Co.'s NBC Universal and Hearst Corp. have finalized an agreement to merge several cable networks together, for now anyway.

Under the terms of the agreement, A&E Television Networks (AETN), which is owned by all three companies, will acquire Lifetime Entertainment Services, which is owned by Disney and Hearst. The channels that will now make up A&E Television Networks are A&E, History Channel, Lifetime Television, Biography and a handful of smaller networks.

Although the deal is being positioned as joining the three companies together, ultimately it is part of an ongoing process to reduce and eventually eliminate NBC Universal's stake in the entity. When the deal is completed, Disney and Hearst will each own 42.5%, and NBC Universal will have a 15% stake. The companies said there are "mechanisms" that could require NBC Universal to exit the partnership no later than 15 years and quite possibly sooner.

For NBC, which only had a 25% in AETN prior to the merger, the deal makes sense because it will be part of a bigger more valuable entity, even if its piece is smaller. The company still has a strong group of cable networks of its own with USA, Syfy, Bravo and MSNBC among others.

Abbe Raven, president and chief executive of AETN, will oversee the new entity, and Andrea Wong, the high-profile CEO of Lifetime, will report to her. There will likely be layoffs once the deal is completed. The companies said the combination is expected to "yield substantial cost efficiencies."

-- Joe Flint


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