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Mar 15, 2004  •  Post A Comment

Omnimedia Sizes Up Options for ‘Martha Stewart Living’

Martha Stewart Living Omnimedia said it is evaluating the choices it faces with its television series “Martha Stewart Living” following the March 5 conviction of its namesake for lying to investigators about a 2001 stock sale.

In its 2003 annual report, filed Monday with the Securities and Exchange Commission, the company said broadcasts for the television series now cover just 50 percent of the United States, down from 90 percent before the verdict. Last week, Viacom dropped the show from its television stations.

That cancellation followed a decision in December by Canada’s Alliance Atlantis Broadcasting not to renew the series for broadcast on its Life Network and HGTV Canada.

“In light of developments, we are evaluating future strategic actions with respect to our television business,” the company said in its filing. “However, we currently intend to continue to make available a combination of new material, existing unused material and repurposed programming for the remainder of the current season.”

Many observers believe the show is likely to stop production after the conclusion of the current season, particularly if Ms. Stewart is sentenced to serve time in prison. Many experts are expecting Ms. Stewart to serve between 10 months and 16 months after being convicted for conspiracy, obstruction and lying to federal investigators about her sale of ImClone Systems shares in December 2001.

Doss Leaves ‘PrimeTime’: David Doss’ tenure as executive producer of “PrimeTime Thursday” ended Friday in a development ABC News said was mutual. However, recent rumors suggest the move might be part of a plan to move “Good Morning America” executive producer Shelley Ross to “PrimeTime” in order to convince Charlie Gibson to remain a co-anchor with Diane Sawyer on “GMA.”

Ms. Ross helped engineer a turnaround in “GMA” fortunes after a long string of failed attempts to restore the morning show to the strength it had enjoyed while assigned to the ABC Entertainment division, before it was annexed by ABC News. But Ms. Ross is perceived as catering to Ms. Sawyer and her wishes to the point that the atmosphere behind the scenes has become less and less tolerable for Mr. Gibson.

Senior producer Bob Lange will serve as interim executive of “PrimeTime.”

Mr. Doss, who sources say had been working without an agreement on a contract for some time, had come back to ABC News in late 2000 as executive producer of “PrimeTime,” which also is anchored by Mr. Sawyer and Mr. Gibson. Mr. Doss had spent the previous five years as executive producer of “NBC Nightly News.”

Asked for a timetable on naming a permanent executive producer for “PrimeTime,” an ABC News spokesman said, “The position will be posted and we expect a lot of candidates to apply.” The spokesman also said it is possible Mr. Doss might pop up in another position at ABC News.

Mr. Doss, who had been dealing with a family illness all weekend, said goodbye to the “PrimeTime” staff via an e-mail Monday. “I am now in discussions about what I’ll be doing next … and of course I’ll let you know when I make a decision,” he wrote. “This is now a good time for all of us to look forward.”

Most observers think the Doss move is but the first in a series.

Cablevision Releases Revised Financial Results: Cablevision Systems Monday released revised financial results for 2001 and 2002, reflecting the completion of the company’s examination of its books following an accounting scandal that resulted in 12 people losing their jobs last year.

As a result of the year-long probe, Bethpage, N.Y.-based Cablevision revised upward its 2002 profit to $93.9 million, or 32 cents a share, from a previously reported $90.1 million, or 31 cents a share. Revenue for 2002 largely unchanged at $3.8 billion.

For 2001, Cablevision revised downward its 2001 profit to $981.5 million, or $3.48 a share, from a previously reported profit of $1 billion, or $3.57 a share. Revenue remained largely unchanged at $3.6 billion.

The company, which released the restatements as part of its filing of the company annual report with the Securities and Exchange Commission.

The restatements culminate an investigation that began in February 2003 at Cablevision’s Rainbow Media unit, when it was discovered that certain marketing and production expenses were improperly booked in the wrong year. That discovery prompted Cablevision to hire law firm Wilmer, Cutler & Pickering to re-examine the company’s financials for further inconsistencies.

The initial discovery of improper accounting led to the firing of 12 Rainbow executives, including AMC Networks President Kate McEnroe, and triggered a broader analysis of the company’s books, including its telecommunications group and Madison Square Garden.

The company said the restatements filed with the SEC reflect the completion of Wilmer Cutler’s investigation. The company also said that it has adopted Wilmer Cutler’s suggestions to improve internal financial controls.

Cablevision also said that it passed on the results of the investigation to the United States Attorney’s Office and the SEC, both of which are investigating the accounting improprieties.

Tribune Group to Carry ‘According to Jim’: Buena Vista Television has reached an agreement with the Tribune station group to carry off-network runs of ABC’s “According to Jim” beginning in fall 2006 in eight of the group’s markets, sources said today.

Those markets will include New York (WPIX-TV) and Los Angeles (KTLA-TV).

The sale marks the second Buena Vista off-net strip to clear the station group. “According to Jim” joins “”My Wife and Kids,” which will debut in 2005.

”Wonderfalls,’ ‘Playing it Straight’ Fail to Elevate Fox: Fox premiered two new shows Friday but still came in fourth for the night in adults 18 to 49 and total viewers. New drama “Wonderfalls” has received much critical acclaim but wasn’t able to match it with Nielsen ratings. “Wonderfalls” scored a fourth-place 2.0 rating/6 share in adults 18 to 49 and 4.8 million viewers, according to Nielsen Media Research fast affiliate data, about on par with how “Boston Public” had been performing in that time slot.

Its reality lead-in, “Playing it Straight,” fared a little better with a 2.3/7 in adults 18 to 49 and 5.3 million viewers. One positive note for “Wonderfalls” is that it held its 18 to 49 audience and gained 200,000 viewers from the first half-hour to the second half-hour.

A rerun of the first episode of UPN’s new animated sitcom “Game Over” performed better than its debut, scoring 0.8/2 in adults 18 to 49 (compared with 0.7/2) and 2.2 million viewers (compared with 2 million).

The WB’s “High School Reunion” also debuted over the weekend, with a not-so-stellar start. It scored a 1.7/4 in adults 18 to 49 and 3.5 million viewers in its Sunday 9 p.m. time slot. That was 15 percent below the demo ratings for its “Charmed” lead-in and 22 percent below “Charmed” in total viewers.

At 10 p.m. Sunday, “Crossing Jordan” won its time slot for the second week in a row, scoring a 4.7/12 in adults 18 to 49 and 12.8 million total viewers. It helped propel NBC to a Sunday night victory in adults 18 to 49.

NBC Sues Liberty: Liberty Media said it sued NBC Feb. 10 over payments Liberty claimed it is contractually entitled to as part of the carriage of CNBC on former Tele-Communications cable systems.

In its Securities and Exchange Commission annual report filing Liberty charged that NBC reduced its quarterly payments to Liberty after cable giant Comcast, which now owns the TCI systems, repudiated the distribution agreement that had been set up for the TCI systems.

Liberty said the carriage agreement and the related quarterly payments date back to 1988, when as a condition for carriage on TCI systems, NBC agreed to pay TCI 6 percent of any revenues over $80 million. Those rights were transferred to Liberty in 1995 and remained intact after TCI systems were sold to AT&T in 1999.

However, when the AT&T systems were sold to Comcast in November 2002, NBC informed Liberty that it was reducing those quarterly payments f
ollowing Comcast’s repudiation of the original TCI carriage agreement.

Liberty noted that it was unaware of any lawsuits filed by NBC against Comcast in connection with the matter.

NBC declined to comment.

Martha Stewart Resigns from Post: In a widely expected move, Martha Stewart stepped down today as a director and chief creative officer of the lifestyle company bearing her name, a week after she was convicted of lying to federal investigators about a stock sale.

Despite her resignation from the board, Ms. Stewart, 62, will continue to have ties to the company she created, Martha Stewart Living Omnimedia, serving as founding editorial director, a role that Chairman Jeffrey Ubben described as “a role that reflects our desire for Martha to continue to make an important contribution to our business.”

The resignation and new role were effective immediately, the company said.

In spite of her conviction, Mr. Ubben said, the board decided to create the new role for the company founder so the company could continue “to have the benefit of Martha’s unique creative talents and contribution,” which he described as being “in the very best interests of MSO and its shareholders.”

Ms. Stewart said in a statement that the decision “is in the best interests of MSO,” adding that she is “heartsick about my personal legal situation.”

Ms. Stewart and her former broker, Peter Bacanovic, were convicted March 5 of obstruction, conspiracy and making false statements in connection with a 2001 sale of ImClone Systems shares. They face sentencing June 17, with many legal experts expecting Ms. Stewart to serve 10 months to 16 months in prison.

Shares in the company were off 4 percent to $9.98 a share in midday trading.

Liberty Spins Off International: Liberty Media said it was splitting its international business into a separate, publicly traded company, in a bid to address investor complaints that they company had become too complicated to adequately value and understand.

At the same time, Liberty Chairman John Malone floated the idea of using the company’s 9 percent stake in Rupert Murdoch’s News Corp. as a launching pad for asset deals between the two companies.

The new company, Liberty Media International, will be spun off pro-rata in a tax-free transaction that will provide Liberty stockholders with new LMI shares. The company expects the sale to be completed this summer.

Following the split, Liberty will retain the recently created interactive and networks groups, which include, among other things, the Starz Encore Group and shopping channel QVC, as well as Liberty’s stakes in cable networks Court TV and Discovery. Liberty also owns stakes in Barry Diller’s InterActiveCorp, Rupert Murdoch’s News Corp. and Time Warner.

LMI will own all of Liberty’s international assets, including UnitedGlobalCom, which owns cable systems in Europe and Latin America, Japanese cable operator Jupiter Communications and Liberty Cablevision of Puerto Rico. LMI’s estimated value is $9 billion.

Meanwhile, Mr. Malone suggested that his stake in News Corp., which ranks him as having voting power second only to Mr. Murdoch, would make it easier for Liberty to sell assets to News Corp. or vice versa.

Quipping initially that “the first thing we gain [by becoming News Corp.’s second-most powerful shareholder] is Rupert’s attention,” Mr. Malone said his reason for trading in nonvoting stock for voting stock was the belief the voting stock had a greater value than nonvoting shares in the event of acquisition.

“There are assets that News Corp. has that Liberty finds very attractive, and perhaps there are assets that Liberty has that News Corp. finds attractive over time.” Mr. Murdoch said. “Nothing is being contemplated right now, but one can never tell.” Mr. Murdoch said that by owning voting stock, the company could use that currency to easily execute such assets sales.

Those developments came as Liberty reported full-year financial results. The Englewood, Colo.-based company reported a fourth-quarter loss of $931 million, or 32 cents a share, compared with a year-earlier loss of $692 million, or 26 cents a share. Revenue surged nearly 300 percent to $2.1 billion, largely the result of the company’s acquisition of complete control of QVC.

For the year, Liberty reported a loss of $1.2 billion, or 42 cents a share, vs. year-earlier red ink of $5.3 billion, or $1.33 a share. Revenue, meantime, was $4 billion, compared with a year-earlier figure of $2.1 billion.