M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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?





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If you read the prospectus carefully, you'd know that the company is an llc (that was to be converted into a corporation only as part of the IPO). Decent shot that they disclaimed fiduciary duties or at least allowed Al to drag the other shareholders in whatever deal he wanted to pursue. Not much of a mystery here.

Posted by: Adam Carr | Jan 4, 2013 10:29:47 AM

There are a number of issues. While arguably the political ideology/legacy of most companies wouldn't be an issue Current TV's (Al Gore's) argument for the sale to Al Jazeera was that sale not only aligned financially but also with the stated mission and founding purpose of the company (if I recall correctly from their press statements). If it is in in the founding documents of the company that the goal of the company is to present a global, centered or unbiased perspective on world happenings (I forget the exact language used in the press statements) then selling to an organization that has a clear political leaning in one direction and that is 100% owned by an individual that has a very polarizing effect on people would violate the founding documents. Nevermind the fact that Mercury had no financial backing, hadn't really done any leg work, and wouldn't have ultimately offerred as much money.

Posted by: Amanda | Jan 7, 2013 7:05:42 AM

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