Exec faces fallout from HBO payout

Time Warner Inc.’s shareholders learned last week that Jeffrey Bewkes quietly approved a settlement 16 years ago to keep under wraps an incident involving a prized executive accused of choking a subordinate.

The nearly $500,000 settlement could raise embarrassing questions for Bewkes -- poised to take the top job when Time Warner Chief Executive Richard Parsons retires next year -- at the company’s annual stockholders’ meeting today in Burbank on the Warner Bros. Studios lot.

Bewkes, Time Warner’s president, fired HBO Chief Executive Chris Albrecht last week in the wake of Albrecht’s arrest for assaulting his girlfriend in Las Vegas and a story in the Los Angeles Times about the 1991 altercation Albrecht had with an underling with whom he was romantically involved. Bewkes was a top HBO executive at the time.

The victim, Sasha Emerson, left the company shortly afterward and is now an interior designer. The settlement was referred to in her divorce papers as an “injury settlement” from HBO.

With billions of dollars in annual revenue, Time Warner would hardly be dented by such a payment.

“I don’t think large institutional shareholders are going to agonize over this,” said independent analyst Harold Vogel.

But corporate governance experts have expressed outrage.

“I think it’s a blatant abuse of shareholder funds,” said Susan Shultz, a corporate governance executive with the Board Institute in Phoenix.

“It impugns the integrity of a company and tarnishes the brand. There ought to be transparency in these cases. It seems very inappropriate that one, the money was spent, and two, that it was not disclosed.”

Payouts of this kind are commonplace in Hollywood, industry insiders say, though they seldom come to light because victims are routinely forced to sign confidentiality agreements when they receive settlements.

Albrecht is considered a creative genius who brought to American viewers some of the most beloved -- and provocative -- programs on television, including “The Sopranos” and “Sex and the City.”

After the incident in 1991, Albrecht kept his job. Emerson, who received the settlement after she accused him of pushing her from a chair and choking her, said she was pressured to leave her post as a senior executive. Before the incident, she had signed a new three-year contract at HBO.

“Everybody is so cozy in Hollywood, it makes it harder for a company to insist on codes of proper behavior,” said Nell Minow, head of the Corporate Library, a research company that monitors corporate governance. She recalled her introduction to the insular culture of Hollywood in the 1970s, amid the infamous David Begelman check-forging scandal.

At the height of his power as head of Columbia Pictures in 1977, Begelman was caught embezzling $40,000 to pay his gambling debts. Columbia’s board of directors wanted to keep the story out of the press. In David McClintick’s 1982 bestseller “Indecent Exposure,” the author recounts how Columbia initially tried to sweep aside the allegations.

After the scandal became public, Begelman was temporarily suspended and then reinstated two months later. He was fired in early 1978 but hired a year later to be head of MGM studios.

“A board cannot be the enabler of bad behavior,” Minow said. “You ignore that at your peril.”

It’s unclear whether the payout to Emerson was ever presented to or blessed by the Time Warner board, though former HBO executives said they were certain the matter went up the corporate ladder.

At the time, Michael Fuchs was head of HBO and Time Warner’s top three officers were the late Steven J. Ross, who was chairman; N.J. Nicholas Jr., who was president; and Gerald Levin, who was chief operating officer and vice chairman. Neither Fuchs nor Levin would comment, and Nicholas didn’t return several phone calls. None of the three is employed by the company today.

Many Hollywood executives said they were stunned by how quickly Time Warner discharged Albrecht. That could help Time Warner deflect the incident, said industry observers, some of whom said they didn’t believe that the Albrecht debacle would have much effect on the company.

“Companies are always embroiled in potential lawsuits, but with rare exception, it’s just the cost of doing business,” said Anthony Valencia, a media and entertainment analyst with Trust Co. of the West, a shareholder of Time Warner.

Vogel, the analyst, said he thought the Albrecht controversy was nothing more than a temporary blip.

“It may just blow over,” he said.

“It’s a source of concern and there’s a limited outrage about this, but Time Warner is such a huge company and there are so many shares outstanding, the impact is immaterial.”

Time Warner has sales today of $40 billion a year. That said, Vogel added: “It should be taken as a lesson for the future. Companies should be careful about disclosing these things.”

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claudia.eller@latimes.com