Current TV Said to Fetch $500 Million From Al Jazeera
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Current TV, the network co-founded by former U.S. Vice President Al Gore, was sold for about $500 million to Al Jazeera, the Qatar-based cable-news channel, according to two people with knowledge of the deal.
The price represents a multiple of the $71 million Gore and his partners paid in 2004, according to a 2008 regulatory filing, for the channel that became Current TV. Gore, chairman, and Joel Hyatt, co-founder and chief executive officer, announced the sale yesterday without providing financial terms.
While the purchase gives Al Jazeera access to the biggest U.S. pay-TV carriers for the first time, it will have to improve on Current TV’s viewership to have staying power. Time Warner Cable Inc., the second-biggest U.S. cable carrier, is dropping Current TV as it seeks to eliminate low-rated channels. The network averaged about 42,000 prime-time viewers last quarter, according to Horizon Media Inc.
“It’s a pretty risky deal for them,” said Derek Baine, an SNL Kagan cable analyst in Monterey, California. The $500 million price paid by Al Jazeera “sounds high.”
Current TV’s owners raised a total of $153 million including debt, according to a report yesterday from PrivCo, a New York-based researcher covering closely held companies.
While Al Jazeera’s English network, started in 2006, reaches 250 million households in 130 countries, the U.S. represents only a small fraction of that audience. Al Jazeera said it will replace Current TV’s shows with its own this year, doubling its U.S. staff to 300, with headquarters in New York.
“Current Media was built based on a few key goals: to give voice to those who are not typically heard; to speak truth to power; to provide independent and diverse points of view; and to tell the stories that no one else is telling,” Gore and Hyatt said in the statement. “Al Jazeera, like Current, believes that facts and truth lead to a better understanding of the world around us.”
In the U.S., Al Jazeera’s English-language network is carried on seven pay-TV providers, including small carriers such as Ohio’s Buckeye CableSystem and Vermont’s Burlington Telecom, according to its website. It reaches 4.7 million households, said Stan Collender, a spokesman for Al Jazeera with Qorvis Communications LLC.
Current TV will be available to more than 40 million U.S. homes after Time Warner Cable stops airing the channel, Al Jazeera said. It is carried by Comcast Corp., DirecTV and Dish Network Corp., the three largest U.S. pay-TV operators.
Time Warner Cable, based in New York, will evaluate adding Al Jazeera, the company said in a statement. Its New York and Los Angeles systems offer content from the channel through agreements with local broadcasters.
Current TV’s prime-time audience in the fourth quarter of 2012 compares with an average of 896,000 for Time Warner Inc.’s CNN and 2.48 million for News Corp.’s Fox News, according to Brad Adgate, senior vice president of research at Horizon Media Inc.
Time Warner Cable, which provides 12.3 million households with cable TV, pays about 12 cents a month for each Current TV subscriber, or $17.7 million a year, according to the media research firm SNL Kagan.
Since Fox News has about 60 times more viewers than Current TV, it would be getting $7.14 a month if it was paid at the same rate as its smaller competitor. It gets 94 cents a month. Walt Disney Co.’s ESPN gets the highest subscriber fees on cable TV, at $5.26 a month.
Time Warner Cable has been monitoring Current TV’s ratings for months, according to a person familiar with the situation. Their contract mandates the network stay above a Nielsen ratings threshold it has struggled to meet, the person said.
Time Warner Cable CEO Glenn Britt said last month that his company would take a harder line on renewing channels with low ratings. Time Warner Cable’s programming costs have risen about 30 percent since 2008, leading to a 15 percent increase in cable-TV prices, Britt said at an investment conference. The trends are unsustainable because prices are rising too quickly for many people to afford, he said.
Current TV generated operating cash flow of $16.3 million on revenue of $108 million last year, according to SNL Kagan. Collender declined to comment on the price Al Jazeera paid for the network.
The Raine Group advised Current TV on the deal.
Current TV’s investors included funds controlled by Los Angeles billionaire Ron Burkle and San Francisco money manager Richard Blum, according to a 2008 Securities and Exchange Commission filing when the company unsuccessfully sought to sell stock to the public. Blum is married to U.S. Senator Dianne Feinstein, a Democrat from San Francisco.
The owners introduced Current TV in 2005 after purchasing the network from Vivendi SA. The network, then called Newsworld International, ran programming from the Canadian Broadcasting Corp.