Fox Family Chiefs Sue News Corp.
By AMANDA BRONSTAD
Staff Reporter
What’s another $400 million in a $5.3 billion deal?
Two former senior executives of Fox Family Worldwide Inc. are alleging that News Corp. foisted a losing Major League Baseball contract onto its Fox Family unit, devaluing it just before its sale to Walt Disney Co. last year.
Mel Woods, Fox Family’s former president, chief operating officer and chief financial officer, and Shuki Levy, its former programming and development executive, have sued News Corp. and Fox Broadcasting Co., claiming the move reduced the value of the network by $400 million and reduced their proceeds from the sale by $9 million each.
The 1 percent stake both Woods and Levy held in the network landed them $25 million each when News Corp. and entertainment mogul Haim Saban, joint owners in Fox Family, sold the cable channel to Disney on July 2001 for $5.3 billion. They claimed in papers filed in Los Angeles Superior Court that they were bilked of another $9 million each because of the baseball deal.
Saban netted $1.5 billion in the sale, News Corp. $1.7 billion.
According to the suit, News Corp. last year forced Fox Family and Saban, who was looking to sell his 49.5 percent ownership in the network, to absorb losses from a six-year contract to broadcast Major League Baseball games.
Spokespersons for Fox Broadcasting and News Corp. declined comment on the suit.
By assuming the losing contract, Woods and Levy claim, the value of Fox Family was reduced by $400 million. News Corp. profited nevertheless, they said in the filing, because it rid its own books of the losses.
Besides losing $4 million each as a result of the lower valuation, Woods and Levy claim News Corp. failed to pay each of them $1.5 million in compensation realized from a $100 million note given to News Corp. by Fox Family as an advance in 1995. The note, plus $50 million in interest, was paid in full when the Fox Family sale occurred.
Also, News Corp. profited by buying back Fox Kids Network in the sale of Fox Family at a reduced value so it could re-sell the kids channel separately for four times the value, the suit said. Woods and Levy said News Corp.’s actions in the buy-back of Fox Kids Network cost them $3.3 million each.
“Saban got the benefit, News Corp. got the benefit by being able to reduce its losses and take back Fox Kids Network,” said Clyde Hettrick, a partner at O’Donnell & Shaeffer LLP representing the pair, “News Corp. got benefits our guys didn’t enjoy.”
