M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Friday, January 4, 2013

Insider trading lawyer disbarred

You remember that former Wilson, Skadden, Cravath, Fried Frank associate who pleaded guilty to insider trading last year?  He got 12 years.  Oh, and he just got disbarred, too.  Word to the wise starting a new career...


January 4, 2013 in Insider Trading | Permalink | Comments (0) | TrackBack (0)

Thursday, January 3, 2013

CurrentTV and Revlon?

More CurrentTV corporate law thoughts.  Is is possible that the managers of CurrentTV violated their Revlon duties in selling the company to Al-Jazeera?  Glenn Beck seems to think so... 

Beck was on his radio show today and made it known that he inquired into purchasing Current Media, Inc. on behalf of his Mecury Radio last year.  That inquiry was, to put it politely, rebuffed by Al Gore:

GLENN: Let me ‑‑ let me tell you what happened. How many months ago? I don’t know how many months ago. When we found out that Current TV was going to go up for sale, it was rumored to be, what, $250 million is what they were asking, and I don’t have $250 million lying around, but we wanted access to 60 million households and so we discussed it and we thought we can somehow or another find $250 million, $300 million. Somehow or another we might be able to do it.

Now, we didn’t know if we were willing to trade whatever it is we would have to trade to be able to get access to that kind of money. Do I want that kinds of debt? Do I want a partner? What am I going to have to give up? So we were very ‑‑ we were exploring and we thought, well, before we put any real thought into this, let’s call Al Gore. Let’s call Current and find out. And I wasn’t involved in any of the negotiations by any stretch of the imagination. We have people who are negotiating all of these things. We called them and said let’s just look. Because wouldn’t I love to buy Current. And so our people called, and a rough outline of the conversation is this, and I’m only telling you this because the Wall Street Journal has said that it is there. We have conversations that are confidential and we don’t ‑‑ I’m not going to tell everybody’s story on the air. The Wall Street Journal is reporting this story. So I want to give you the full story.

So we call up, and I don’t even know who we talked to but, you know, it was the person handling the negotiations. And our person says, “We would like to talk to you about buying Current.” Great, great, fantastic. So who is Mercury exactly? “Umm… (mumbling)… but let’s talk about, so how much are you…” “Excuse me. Who is Mercury exactly?” “It’s a wholly owned subsidiary of Glenn Beck.” “Excuse me?” “It’s Glenn Beck’s company.” “It’s Glenn Beck’s company?” Silence. “That one is going to probably have to go to the vice president. Al Gore’s probably going to have to answer that one. I don’t… we’ll call and we’ll get an answer and then we’ll call you back.” No kidding, within 15 minutes, brrrppp, we get a call back. “Yeah, umm‑umm, no, not even interested. We ‑‑ our legacy is too important and there would quite frankly be too many people, too many friends that the vice president would have to explain why he’s selling to Glenn Beck.”

First thing: If they are selling the company for cash, should the political ideology of the buyer enter into equation if a director wants to comport with his obligations under Revlon?  I'll spare you the details, but in his discussion, Beck makes a pretty good case that, no, if you are going to cash out, thoughts about your legacy aren't compatible with your obligations to shareholders under Revlon.  Of course, there is no obligation to run an auction under Revlon, but the managers conducting the sale have to be motivated by maximizing shareholder value rather than the political ideology of potential acquirers.

Second, one might say, hey, it's a private company, who has standing to sue anyway?  Turns out -according to an S-1 filed as part of Current's failed 2008 IPO that both DirectTV and Comcast were shareholders of the CurrentTV.  They have standing.  I wonder if they cared about the sale process?

So many corporate law questions in this simple little deal.  Whodathunkit?




January 3, 2013 in Private Transactions | Permalink | Comments (2) | TrackBack (0)

CurrentTV and third party consents

OK, so Dec. 21 came and went without any Mayan apocalypse...we went over the fiscal cliff and the only thing that happened was that my suspicion that our Congress is useless was confirmed. OK, so with all that behind us, might as well get back to blogging!  Apologies for the light blogging of late.  Lots of things and what with the end of the world, didn't seem worth it.

Anyway, the big news of the day is the fact that Time Warner Cable subscribers have had CurrentTV pulled from their line-ups following the announcement of Current's acquisition by Al-Jazeera for $400 million.  First, people watch CurrentTV?  Well, if they do, fewer of them do so now.  According to a memo released to employees by CurrentTV's CEO Joel Hyatt, cable carrier Time Warner Cable refused to consent to the transaction and as a result immediately dropped CurrentTV from its channel lineup.  TIme Warner Cable has something on the order of 15 million subscribers and none of them will be able to watch Current/Al-Jazeera going forward.  That's 25% of Current's current subscriber based.  Ouch.  

From Time Warner Cable's point of view, dropping the Current/Al-Jazeera network is a little odd.  I mean, commercially, there's nowhere to go but up for the new Al-Jazeera when compared to Current's ratings.   

In any event, for the M&A lawyers around, you'll be familiar with the mechanics of how this probably went down.  CurrentTV is privately held, so the exact details will remain shrouded for the timebeing.  

In its carriage contracts with CurrentTV, Time Warner Cable (and presumably all the other cable carriers) included a change of control provision that permitted Time Warner Cable to terminate carriage in the event of a change of control.  This was, no doubt, dutifully spotted by junior associates for Al-Jazeera's counsel during the diligence process and a condition placed in the merger agreement requiring consents by all the cable carriers before closing.  This condition was likely waived (with a price renegotiation?) at closing.

Just today, CurrentTV personality - and former Governor of Michigan - Jennifer Granholm announced she would leave the network following its acquisition by Al-Jazeera.  Presumably, Al-Jazeera had locked up key employees prior to signing its acquisition agreement. So one must assume that Granholm - one of the network's "leading personalities" - wasn't all that important, or that they weren't able to lock her up, and the price was negotiated down as a result.  Or not.  

Just wandering through these press clippings makes for a great exam fact pattern!  My new students for the Spring should start paying attention! 

Happy 2013 everyone!



January 3, 2013 in Private Transactions | Permalink | Comments (0) | TrackBack (0)