Connie Bruck’s New Yorker piece is out, and endless. By far the most interesting aspect involves the backstory to Haim Saban’s sale, with Rupert Murdoch, of the Fox Family Channel to the Walt Disney Company in 2001 for $5.2 billion.
The piece details Disney chief Michael Eisner’s getting cold feet because he overpaid, and trying to block the deal through Brazil.
But WaxWord has learned of yet another tactic Eisner tried after that: crying "anthrax" as a material change to the contract. (Neither worked.)
To begin with, according to Bruck, Saban succeeded in convincing the usually unbending Murdoch to create a joint venture between Saban Productions and Fox Kids Worldwide.
But much to Murdoch’s shock, when the network’s ratings foundered, Saban chose to exercise an option to sell his 49.5 percent within five years. He and Murdoch bickered over the matter, and finally agreed to find a third-party buyer.
Enter Disney, and a genius round of maneuvering at Herb Allen’s Sun Valley retreat in the summer of 2001. According to Bruck, Saban enlisted Stanley Gold, a Disney director and major shareholder, to pressure Eisner to acquire the network. Eisner hesitated, because of the price. (Saban told Bruck that Gold approached him on Disney’s behalf.)
Bruck writes: “But at a meeting with Murdoch and Saban, at Allen & Co.’s annual Sun Valley investment retreat, Eisner was convinced that he might lose the company if he failed to act.”
“We did a really good job of positioning this as a deal with a multitude of suitors,” said Peter Chernin, who at the time was president of News Corp. “There was no one else, not even close,” Chase Carey, who now has Chernin’s job, told Bruck.
The next day, Eisner agreed to pay $5.3 billion (including more than $2 billion of debt) for the company — about a billion dollars more than News Corp. executives had believed it would bring.
But according to Bruck, Eisner realized he’d agreed to pay about $1 billion too much and tried to back out. The deal required approval from many foreign regulatory agencies, and the kicker was Brazil, where approval was going to drag beyond the stated deadline.
According to Chernin, Saban placed a call to Bill Clinton, and the regulatory hurdle in Brazil disappeared.
“Haim said, ‘Let me make a phone call — maybe I can get something done here,’” Chernin told Bruck.
Clinton called the president of Brazil, and soon after, approval came through.
Bruck goes on to say that Saban subsequently made a $10 million pledge to the Democratic National Committee. Then-DNC chair Terry McAuliffe denied that there was quid pro quo, though the article does not actually say there was one:
“McAuliffe says that DNC lawyers were not involved in any tax-benefit planning. All I can tell you is there is no lawyer at the DNC who would have that conversation," he said. “That would be a felony.”
Meanwhile, WaxWord has learned that after the Brazil hurdle was cleared, Eisner tried yet another way to block the deal.
It was shortly after 9/11, and the anthrax scare was sweeping the nation.
According to an insider in the deal, Disney claimed the anthrax threat created a “material change” to the conditions around the agreement.
Saban wasn’t having that; instead, he cut the price by $100 million – and that was why the final price was $5.2 billion.
Neither Eisner nor Saban would comment for this story.
It was then, and remains today, one of the most stunning business coups in entertainment history.
Related: Exclusive: Battle at the New Yorker Over Haim Saban Profile