Posted Wednesday, July 24
SEC probing AOL Time Warner
The Securities and Exchange Commission is conducting a fact-finding inquiry into AOL Time Warner accounting practices, AOL Time Warner CEO Richard Parsons revealed to analysts during an earnings call late today.
The inquiry was prompted by recent Washington Post inquiries into how America Online accounted for $270 million in past revenues. Mr. Parsons said the company is “comfortable” with its existing accounting practices and policies, and voluntarily contacted the SEC before the stories were published. The company’s accountants, Ernst & Young, signed off on the America Online accounting being questioned at the time it was processed and again last week, he said.
AOL Time Warner reported slightly better than expected second-quarter earnings before interest, taxes, depreciation and amortization, with results up 2 percent to $2.46 billion on 10 percent growth in revenues to $10.58 billion vs. year-ago results. Although free cash flow of $2.6 billion for the first six months (used to reduce its $27 billion in debt) is nearly equal to what the company expected for the full year, it is expected to fall off during the second half of 2002.
America Online posted a 42 percent loss in advertising and commerce revenues and 45 percent drop in content and other revenues against a 20 percent gain in subscription revenues in the second quarter. It was offset by double-digit gains in the revenue and earnings of the company’s cable, film entertainment and network businesses. Still, AOL Time Warner says it expects to hit the higher end of its full-year revenue growth forecast, or about 8 percent, and the lower end of its full-year earnings forecast, or 5 percent.
AOL Time Warner stock closed at $11.40 Wednesday, down 15 cents.
Sharpton sues HBO for $1 billion: The Rev. Al Sharpton has filed a $1 billion libel lawsuit in Manhattan against HBO, claiming the cable network defamed him when it aired a nearly 20-year-old videotape showing him being approached by an undercover FBI agent about a cocaine deal.
The lawsuit asks for $500 million in compensatory damages and $500 million in punitive damages from the defendants, which include HBO and HBO Real Sports.
The 1983 tape, broadcast this week by HBO’s “Real Sports With Bryant Gumbel,” showed Rev. Sharpton responding “I hear you” as the agent described profits that would accrue to Rev. Sharpton if he participated in a drug deal.
The Rev. Sharpton said in his defense that if you ask someone to marry you and the person replies “I hear you,” you shouldn’t begin planning a wedding. He also called the telecast part of a “smear campaign” targeting him in advance of a possible presidential campaign in 2004 and said that another tape existed in which he told the same agent directly that he would not be involved with drugs. An HBO spokesman called the suit “unworthy of comment,” according to a Reuters wire report.
Rigases arrested, charged with ‘looting’ Adelphia: John Rigas, the founder and former chairman and CEO of now-bankrupt Adelphia Communications, and his sons, Michael and Timothy Rigas, have been arrested and charged with looting the nation’s sixth-largest multiple-system cable operator and using it as their “personal piggy bank.”
Also arrested in Coudersport, Pa., the company’s headquarters, were James Brown, former VP of finance, and Michael Mulcahey, former director of internal reporting, according to a report by the Associated Press.
A Manhattan federal court filing contended that the Rigas family, had “looted Adelphia on a massive scale, using the company as [its] personal piggy bank, at the expense of public investors and creditors,” according to the report.
In addition to criminal charges, the Securities and Exchange Commission has also filed a civil lawsuit in Manhattan, charging massive financial fraud by the family and other officials.
The Rigas family allegedly received up to $3.1 billion in loans for which the company is now liable. Those loans generally were for questionable purposes and at questionable terms. The Rigas family members lost their executive positions and places on the company’s board after the disclosures of the loans. The discovery of the loans eventually led to Adelphia’s Chapter 11 bankruptcy-protection filing last month.
Off-net ‘Malcolm’ clears Fox stations in 10 markets: Twentieth Television’s upcoming off-net runs of “Malcolm in the Middle” have quickly nabbed nearly a third of the country for the series’ debut in 2004. The distributor has signed Fox-owned stations in 10 markets: WNYW-TV and WWOR-TV in New York; KTTV and KCOP-TV, Los Angeles; WFLD-TV, Chicago; WTXF-TV, Philadelphia; WFXT-TV, Boston; KDFW-TV and KDFI-TV in Dallas; WTTG-TV and WDCA-TV in Washington; WAGA-TV , Atlanta; KRIV-TV and KTXH-TV in Houston; and KDVR-TV in Denver.
Wright says Sassa on secret NBC project: Former NBC West Coast President Scott Sassa is still at NBC and is working on a secret project, NBC Chairman Bob Wright said Wednesday morning at the Television Critics Association press tour in Pasadena, Calif.
Mr. Sassa is looking at a number of NBC properties to see whether there is some sort of strategy that could evolve with them, Mr. Wright said. Mr. Sassa, who was standing in back of room, quickly exited when Mr. Wright made those comments. Asked by Electronic Media to elaborate, Mr. Sassa declined to do so.
Mr. Wright also addressed TiVo, accounting procedures and MSNBC. Mr. Wright, who is a TiVo user, said he thinks a hard drive with memory and TiVo-like features will be incorporated into set-top boxes as a standard feature within three to five years. If the boxes become ubiquitous, Mr. Wright said, networks may have to make format changes such as product placements or logos to make up for lost advertising.
As vice chairman of General Electric, Mr. Wright said he is comfortable with its accounting procedures and doesn’t think it has done anything wrong. He said there is a big distinction between crooks who have done things that are reprehensible and should be jailed vs. those who have done nothing wrong but could not explain various accounting procedures easily or transparently.
On the all-news network front, Mr. Wright said MSNBC never aimed to be CNN. He cited CNN’s problem with long viewership dips when there isn’t any major breaking news, which is why, he said, MSNBC was always supposed to be reliant on more long-form programming. However, he said, cable news evolved into a talk radio format, which Fox News was quick to exploit. MSNBC has adopted a similar format now in order to be a bigger competitor in that space, and Mr. Wright said he expects the network to stay with that format for a while.
Diller praises Vivendi Universal team: Barry Diller, chairman of USA Interactive, gave onetime nemesis Edgar Bronfman Jr. and the new management of Vivendi Universal a vote of confidence during a second-quarter earnings call with analysts Wednesday, applauding their efforts to financially “stabilize” the company.
In his role as CEO of Vivendi Universal Entertainment — a production and cable network unit that eventually is expected to be spun off — Mr. Diller said he met in Paris Monday with Vivendi Universal’s new chief executive Jean-Rene Fourtou to review VUE’s operations.
Vivendi said Tuesday it will restructure and spin off Canal Plus, the leading pay TV and satellite service, which is valued at nearly $6 billion. He called Mr. Bronfman “an unreported hero,” working on behalf of all shareholders.
The Bronfmans have lost more than $2 billion as a result of the more than 70 percent decline in Vivendi Universal stock. Mr. Diller and companies such as NBC parent General Electric and Viacom are potential buyers for VUE.
Consumers Union calls for cable rate crackdown: The Consumers Union today urged Congress to crack down on cable TV rates by shifting regulatory authority over the industry from the Federal Communications Commission to the states.
“Congress should provide states the same power over cable monopolies that they have over telephone monopolies,” the watchdog group said in a report
released today. The report alleges that cable rates have risen 44.7 percent — 21/2 times the rate of inflation — since 1996, when the Telecommunications Act was approved. That law provided for cable’s deregulation.
“When markets fail to police themselves properly, it is critical to impose oversight of market abuses,” said Gene Kimmelman, director of the Consumers Union’s Washington office.
Marc Smith, a spokesman for the National Cable & Telecommunications Association, said the report is based on a false premise because cable wasn’t actually deregulated until March 1999.
“According to the Bureau of Labor Statistics, cable prices have exceeded the rate of inflation by 2.35 percent a year since prices were deregulated while they increased 5.34 percent during the three years of regulation after 1996,” Mr. Smith said. “The report unfairly singles out the cable industry and ignores the pricing pressures faced by all multichannel providers, including DBS, which have been forced to raise their prices as well to compensate for increased programming costs.”
Fox wins Tuesday in 18-49 demo: Fox’s surging “American Idol” reality series, which has helped the network unseat NBC for the past three weeks (July 1-21) among adults 18 to 49, again propelled Fox to a major win in the key adult demo last night.
As the first of the live editions to air weekly (also on Wednesdays), the 9 p.m.-to-10 p.m. Tuesday airing of “American Idol” hit highs for the night in adults 18 to 49 (5.3 rating/15 share), households (6.5/11) and total viewers (10.5 million), according to Nielsen’s preliminary fast national data. In addition to holding even with its previous airing (July 16) among adults 18 to 49 (5.3/17), “American Idol’s” latest airing improved 14 percent from the first to second half-hour frames (5.0/15 vs. 5.7/16) last night.
“American Idol” beat ABC’s competing “Mole 2” reality series by 50 percent and 47 percent margins in adults 18 to 34 (5.7/18 vs. 3.8/12) and adults 18 to 49 (5.3/15 vs. 3.6/10). However, “Mole 2” did improve 24 percent week to week in adults 18 to 49 (from a 2.9/9 score) and tied CBS’s 10 p.m. repeat of “Judging Amy” in total viewers (7.7 million). NBC’s “Dateline” newsmag won the 10 p.m. hour in adults 18 to 49 (3.2/9), edging out ABC’s reality series “Houston Medical” (3.1/9), which nonetheless grew 24 percent from its week-ago score (2.5/8).
NBC’s 8 p.m.-to-9 p.m. reality series “Spy TV” tied ABC’s double-run repeats in adults 18 to 49 (2.7/9), but CBS’s rerun of “JAG” won the hour in total viewers (8.6 million).
Fox won the night in adults 18 to 49 (4.0/12), followed by ABC (3.1/9), NBC (2.8/8) and CBS (2.0/6). CBS won the night in total viewers (7.97 million) and households (5.5/10).
Fox also won the week of July 15-21 among adults 18 to 49 (3.1/10), holding a 7 percent margin over NBC (2.9/9), according to Nielsen’s final national averages.
‘Providence’ soundtrack due Aug. 6: NBC Enterprises and MCA Nashville have partnered to release the soundtrack to NBC’s Friday drama “Providence,” featuring popular artists such as Shawn Colvin, Beth Nielsen Chapman, Andrea Bocelli, Titiyo and newcomer Rebecca Lynn Howard. “Music From the Television Series Providence” is set for release on the MCA label Aug. 6.
NBC Enterprises and MCA Nashville are partnering on the promotion of the soundtrack and have set promos to air within broadcasts of “Providence.” Rebecca Lynn Howard’s “Forgive,” Titiyo’s “Come Along” and Shawn Colvin’s rerecording of the “Providence” theme song, “In My Life” (penned by John Lennon and Paul McCartney), will be used in the promos.
The “Providence” soundtrack includes music from past episodes and six new songs that will be placed within episodes to air in the coming season.
ABC-owned stations renew ‘Fortune,’ ‘Jeopardy!’: King World has added two more years to the run of its reigning game show tandem, “Wheel of Fortune” and “Jeopardy!” The syndicated strips have been renewed on key ABC owned-and-operated stations for the 2005-2006 and 2006-2007 seasons and have now pinned down the top five markets.
The ABC stations, covering more than 21 percent of the country, include WABC (New York), KABC (Los Angeles), WLS (Chicago), WPVI (Philadelphia) and KGO (San Francisco), as well as WTVD (Raleigh-Durham, N.C.) and KFSN (Fresno, Calif.).
Oller joins WB Domestic Cable: Marisol Oller has been named VP, sales, at Warner Bros. Domestic Cable Distribution, where she will be responsible for the domestic licensing of Warner Bros. feature films, TV series, miniseries, TV movies and specials to the pay and basic cable networks. Oller joins WBDCD from Univision, where she served in a senior sales position.#