- Deep-Pocketed Qatari Royal Family That Owns Al Jazeera Pays Premium Price Of 7x Current TV's 2012 Revenue of $112 Million And 41x Cash Flow To Win Auction For the liberal U.S. TV Channel Co-Founded by Al Gore
- Current TV Co-Founder Joel Hyatt In Memo To Staff Tonight: "I spent a week at Al Jazeera headquarters in Qatar and I could not have been more impressed with their operation. It became clear to me that Al Jazeera was founded with the same goals we had for Current."
- Time Warner Cable to invoke "Change of Control" clause in Current TV carriage contract and discontinue carrying channel to millions of homes, sources say
- PrivCo Fair Valuation of Current TV using private TV network M&A deal comps based on average revenue multiples: only $486 Million.
- Price paid by Al Jazeera "far more than what a rational bidder aiming solely for a financial return would pay" - PrivCo CEO Sam Hamadeh
January 2, 2013 9:00 pm EST - Al Jazeera, the pan-Arab satellite TV news network owned by the Qatari Royal Family, paid a PrivCo-estimated $784 million to acquire the liberal TV network co-founded by Al Gore, privately-held Current TV, a rich 7x Current TV's 2012 revenue of $112 million. (The purchase price is confirmed by PrivCo's knowledge of the sales proceedings of Current TV, which has been shopped for months by investment bank Barclays, and is far above comparable M&A transaction multiples for privately-held cable TV networks, according to PrivCo M&A data. PrivCo has learned that Al Jazeera's deep-pocketed oil rich owners bid far above the next highest bidder, which included Comcast.) Al Gore, who has an ownership of approximately 10% in the company (named Current Media LLC), just pocketed $78.4 million in cash as a result of the transaction (1). Joel Hyatt, Co-Founder of Current TV, informed staff tonight of the acquisition in an internal memo obtained by PrivCo (see Exhibits: Current Media for the full text of the internal memo):
"When considering the several suitors who were interested in acquiring Current, it became clear to us that Al Jazeera was founded with the same goals we had for Current: To give voice to those whose voices are not typically heard..."
"Al and I did significant due diligence as part of our evaluation process. We were impressed with all that we learned about Al Jazeera and its journalistic integrity, global reach, award-winning programming, and growing influence around the world..."
"Al Jazeera English has won many, many awards including an Alfred I DuPont Award for Best Documentary, the Franklin Delano Roosevelt Four Freedoms Awards for freedom of speech and expression, an Amnesty International Award for International TV and Radio, the prestigious Peabody Award, and the Huffington Post Ultimate Media Gamechanger award..."
"All of this is compelling, but what really convinced Al and me that Al Jazeera would be a great home for the people of Current was their publicly stated Values and Core Capabilities..."
"Their mission includes the following: Diversity ("bringing stories from the underreported communities, societies and cultures from across the globe), Journalistic Integrity ("committed to the uncompromising pursuit of truth and the ideals of journalism"), and A Voice for the Voiceless ("promoting the basic human right of the freedom of expression for people everywhere")."
- Internal Memo to CurrentTV Staff From Co-Founder Joel Hyatt, Jan. 2, 2013 (Obtained by PrivCo)
However, considering the fact that several suitors were interested in acquiring Current TV, PrivCo concludes that despite Mr. Hyatt's suggestions to the contrary, Current TV was simply sold to the highest bidder. The company had been shopped by Barclays for some time, and the deep-pocketed Qatari Royal Family backing Al Jazeera handily outbid any other bidder's rational bid. (PrivCo analysis shows that private cable TV networks typically sell for 4.2-5x revenue. Al Jazeera is paying 7x Current TV's 2012 revenue of $112 Million.) PrivCo's fair value calculation of Current TV based on these recent private TV network M&A "deal comps" using average recent revenue multiples is only $486 Million.
The acquisition price also is a pricey multiple of 49x Current Media's 2012 cash flow of $16 million, according to those who viewed the Offering Memorandum prepared by Barclay's. The cash flow multiple is one of the highest PrivCo has on record for a privately-held cable TV network acquisition.
Joel Hyatt's memo, provided above, also glosses over the importance of who the buyer was: a controversial news channel owned by the Qatari Royal Family, with deep pockets willing to pay excessive premiums to achieve their goal of bringing Al Jazeera news in English to the U.S. market. The Al Jazeera bid was far in excess of what other bidders were willing to pay, sources close to the deal confirm.
PrivCo sources familiar with CurrentTV's cable and satellite system carriage contracts also confirmed that CurrentTV had a "content clause" in most of its cable and satelite contracts requiring it to be a news network, requiring any acquirer to keep it a news network. The "content clause" soured some interested bidders who otherwise would have paid more for the channel's coveted slot in tens of millions of homes and converted the channel to completely new scripted or reality TV programming with higher ratings. The content clause was not a barrier to AlJazeera, as it reportedly has told Current Media staff it plans to remake the channel "AlJazeera America", a 24 hour cable news network.
(1) Represents shares owned by Al Gore in his own name and held in trust for his family, including his son private-equity investor Al Gore III.
Update: Jan 3: CurrentTV is currently blacked out on Time Warner Cable in New York City (Channel 103). In addition, on Time Warner Cable's on-screen programming guide, all programming for CurrentTV says "Data Not Available" for all days and times.
Current TV's 2012 Financial Highlights:
- Revenue: $112M (2012), $99M (2011), $86M (2010)
- 1 Year Revenue Growth: 13.5% (2011-2012)
- Total Employees: 40 (2012)
- Current Media's M&A Financial Advisor: The Raine Group