Partners Deny Report That Fox Family Worldwide Is for Sale

In an effort to knock down press reports that Fox Family Worldwide Inc. is for sale, the two joint venture partners of the children’s television and cable company said Thursday that they are not parting ways and are eager to build on their five-year partnership.

Haim Saban, the founder of Saban Entertainment, and Chase Carey, chairman of Fox Television, said in an interview that the Wall Street Journal report Thursday that the two partners had approached buyers, including USA Networks, is erroneous. “It’s a lie,” said Saban, who manages Fox Family Worldwide as its chairman and chief executive.

Under the partnership agreement by Saban Entertainment and Fox Broadcasting Co., Saban has the right to sell his 49.5% share in the company to Fox beginning this month. According to Securities and Exchange Commission documents, that right expires in December.

But Saban and Carey said Thursday that Saban will not exercise the right. Saban said the partners will stay together until at least 2002, when News Corp., Fox’s parent, has a right to buy him out of the company, which owns the Fox Family Channel, several international children’s channels, the Saban library and the Fox Kids Network, a programming block that airs on Fox’s television network.

“You think now that we are finally growing, that I am going to sell it?” said Saban, who is credited with turning “Mighty Morphin Power Rangers” into a worldwide blockbuster.

But that does not jibe with the speculation within Hollywood and what sources say at Fox. The negotiations between Saban and Fox have been the subject of wide speculation for months. Sources said that letters have been flying back and forth, and that Saban was threatening to exercise his so-called put option as recently as two weeks ago.

They said News Corp. Chairman Rupert Murdoch was outraged at the price Saban was demanding for his half of the company. Sources said the two parties were about $1 billion apart in price, with Saban valuing the company at nearly $6 billion, including more than $1 billion in debt, and Murdoch pegging its worth between $4 billion and $5 billion.

Sources said Saban was justifying his valuation based on an initial public offering of Fox Kids Europe last year in the Netherlands. Entertainment stocks have commanded Internet-type valuations in Europe, and critics scoff at the $1-billion value of Fox Kids Europe, which they say has announced more channels than it has launched.

One Fox source said Murdoch agreed to allow Saban to issue stock in Europe only if Saban agreed to waive his rights to force Murdoch to buy his share of the company. Murdoch suspected that Saban might try to inflate the value for Fox Kids Worldwide on the eve of such a sale.

Fox sources also said Murdoch was not eager to buy out Saban at a time when he was trying to raise money on Wall Street for his new global satellite venture, Global Sky Networks.

They said tensions between Saban and Fox started building two years ago after the Fox Family Channel, which was purchased by the partners in 1997 from evangelist Pat Robertson for $1.7 billion, deteriorated in the ratings and started hemorrhaging money. An attempt to convert the religious channel to children’s programming was a disaster.

Fox had to lend the company $125 million to prevent Fox Family from defaulting on loans. Saban used the European stock offering to pay back the debt. The cable network also has lost the top management team in place when the channel was repositioned in August.

On Thursday, Saban denied that there has been high turnover at Fox Family or any tension with Murdoch. “Murdoch, Chase [Carey] and [News Corp. President Peter] Chernin are very close friends. Wendy and Rupert [Murdoch] were to the house for dinner last weekend and not one word about the business,” Saban said.

He said he had “never had any intention” of exercising his put. “They don’t want me to and I don’t want to,” he said.

Yet sources close to the executive said the two sides agreed this week to a three-to-six-month cooling-off period and will revisit the issue of Saban’s sale of his share of the company to Murdoch in January.

News Corp. spokesman Gary Ginsberg confirmed Tuesday that the two sides had agreed to put off the decision for three to six months.

One source said the parties were also toying with other “ways to skin the cat,” such as splitting up the assets.

Saban, however, said that the matter has been decided, and that there is no longer a put this year and none in 2001.