M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Thursday, January 3, 2013

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!




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