Global Vision : Pat Robertson’s $74-Million Bid May Link MTM Parent and Family Channel

LONDON —  Lou Grant and his reporters at the Trib probably would have recoiled at the idea of their newspaper being taken over by a company whose chairman had declared feminism “a socialist, anti-family political movement that encourages women to leave their husbands, kill their children, practice witchcraft, destroy capitalism and become lesbians.”

But the real-life equivalent is about to occur to the company that produced “Lou Grant” and other classic TV series such as “Hill Street Blues” and “St. Elsewhere.”

Barring a last-minute development, the Rev. Pat Robertson’s International Family Entertainment Inc., which operates cable’s successful Family Channel, is poised to take over MTM and its British parent company, TVS Entertainment, in a $74-million deal.

Robertson’s company plans to use TVS’ production facilities and library of TV shows to enlarge its pool of programming for the Family Channel. It also wants to make TVS’ South England broadcast studios a beachhead for launching new TV channels in Great Britain and elsewhere in Europe.

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Robertson, who ran for President in 1988 and played a prominent role in the 1992 Republican campaign, during which he made the statements about feminism, has become a controversial figure in his capacity as a leader of the religious right. But he remains relatively unassailed in his alter ego of wealthy broadcasting executive.

The only public objection to his takeover of MTM and TVS has come from a group of disgruntled TVS shareholders who say they are not being paid enough for their stock. TVS’ directors have advised shareholders to accept the deal, which offers them stock in Robertson’s company or a slightly smaller amount in cash for their TVS shares.

Robertson’s company needs at least 90% stockholder approval to complete the deal. So far, it has received acceptances from 69.1% of TVS ordinary shareholders and 12.7% of its preferred shareholders.

Some are holding out for a better offer. But the deal is expected to be approved without major changes. The closure deadline has been extended to Monday.

If the takeover is completed, it will give a substantial boost to Robertson’s plans to take his Family Channel global. The channel already has remarkable penetration in the U.S., where it is carried by more than 10,000 cable operators and reaches 93% of all cable households. It offers a mix of original series and reruns that the network believes promote, in their now well-known phrase, “traditional family values.”

Among the channel’s programs are “The New Zorro,” “Big Brother Jake,” “Gunsmoke” and “The 700 Club,” the religious series that boosted host Robertson to televangelical prominence. It also sells program-length air time to religious broadcasters and producers of “infomercials.”

The network was founded in 1977 as a division of Robertson’s Christian Broadcasting Network and primarily featured religious programming. In 1989, it was christened the “Family Channel,” and it became so successful that it threatened the tax-exempt status of its parent.

By the late 1980s, CBN’s revenue from the Family Channel had increased to such a point, in comparison to CBN’s income from its ministry, that tax advisers recommended spinning off the cable network to protect the tax-exempt status of CBN, according to company documents.

Robertson formed IFE in November, 1989, to buy the Family Channel from CBN, where he remains chairman, president and chief executive.

In 1991, Robertson received $371,639 in salary and bonuses from IFE alone, according to company records. His son, Timothy, president and chief executive of the company, received $446,199 in salary and bonuses last year, plus an additional $50,660 deferred bonus for service to the company during 1990. Both also hold considerable amounts of stock in the company.

IFE was floated off as a public corporation in April, 1992.

Besides bidding for TVS in Britain, IFE also has been negotiating deals that would bring the Family Channel to South Korea and to the Czech and Slovak republics.

While the TVS deal will probably go through, it will not be without a trail of bitterness.

Some TVS investors were deeply disturbed to learn that a number of the British company’s directors had amended their contracts last August so that they would be paid substantial bonuses if the company were taken over. Managing Director Tony Brooke, for example, will receive a bonus of $290,000 “to reflect additional duties and responsibilities.”

Said angry shareholder Nicholas Berry, who owns 5% of the TVS preference shares: “The directors are swimming in gold. They’ve looked after themselves better than they have their shareholders.”

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James Gatward, who was ousted as chief executive of TVS after buying MTM and is one of the largest shareholders, also has been vocal about his objections to the deal. “My problem with the offer, really,” he said, “is lack of information.” He does not believe that enough financial information has been revealed to assess the true current value of TVS.

TVS is hardly in a position of negotiating strength, however. For the last 10 years, the company has held a lucrative contract to provide television service for the southeast region of England as one of the 15 regional broadcasters that make up Britain’s Independent Television Network. But the company’s fortunes began to nose-dive after it bought MTM for $320 million in 1988. Soon afterward, the television syndication business in the United States began a sharp decline, and it became clear that TVS had drastically overpaid for its American subsidiary.

A Heavenly Deal for Robertson

When rhe Rev. Pat Robertson’s Internatioanl Family Entertainment Inc. completes its $74-million purchase of TVS Entertainment, it will gain access to a library of classic television shows. The programs will be shown on Robertson’s Family Channel and elsewhere.