Filing of three antitrust lawsuits threaten to quash approval of FNN sale to CNBC.

Filing of three antitrust lawsuits threaten to quash approval of FNN sale to CNBC 

Clouds of antitrust lawsuits loomed over a judge's decision last week to approve the sale of Financial News Network to competing business cable station CNBC, as hundreds of FNN employees in Los Angeles readied themselves for the imminent closure of their production facilities.

Judge Francis Conrad, a U.S. Bankruptcy Court judge in New York, on May 9 accepted a CNBC bid valued at between $154.3 million and $162 million for financially troubled FNN, including $145 million in cash.

Gil Schwartz, spokesman for Group W (Westinghouse Broadcasting), which together with Dow Jones & Co. was the competing bidder for FNN, said Group W was appealing the ruling in U.S. District Court.

Mike Moyle, a spokesman for the Pennsylvania Attorney General's office, called Conrad's decision "interim," noting three lawsuits were still pending that charge the CNBC sale violates antitrust laws by eliminating competition. CNBC has said it would merge the two stations.

"We definitely feel it's not over," said Moyle.

Lawsuits filed by Pennsylvania Attorney General Ernie Preate and Illinois Attorney General Roland Burris were scheduled to be addressed at a hearing in Conrad's court May 10. Conrad had not yet ruled on the suits at press time, but appeals of his decision were likely, as Preate's office had already filed a motion to have the issue moved to another court.

The joint venture group formed by Dow Jones and group W also has filed an antitrust complaint in U.S. District Court.

CNBC President Al Barber confirmed last week the majority of the merged station's operations would be in New York, with the possibility of a CNBC/FNN bureau in Los Angeles. FNN now has major operations in Los Angeles, where it once was based.

"We've interviewed over 250 FNN employees -- everyone who wanted to be interviewed," said Barber. "In many cases, employees will have to be willing to move to the East Coast."

At one time, FNN employees in Los Angeles were rooting for Group W because it had pledged to keep operating FNN as a competing station. However, employees later said they were given the impression that Group W would house the station's main facilities in either Stamford, Conn., (where Group W has studios) or Manhattan, where Dow Jones offices are located. Group W never formally announced where FNN offices would be if it won the bidding war.

"We might stay here a little longer if it was Dow Jones; that was the only difference," an FNN employee in Los Angeles said last week. "It really didn't matter."

Moyle daid Preate's office decided to get involved in the case because he expects a merger to raise subscriber and advertising rates by eliminating competition, and because Westinghouse is a Pennsylvania company.

"Ti's in the interests of individual citizens and corporate citizens," said Moyle.

CNBC, Group W and the other interested parties were in court for three days last week in a sort of court auction to determine who would buy FNN. Earlier, each company had bid $115 million.

On May 7, Group W/Dow Jones said it was bidding $167 million, including $125 million in cash, plus a share in future revenue. CNBC bid $149 million, mostly in cash. It was the first time the bids matched the listed FNN liabilities of $145 million.

After hearings May 7-8 on the two bids' merits, CNBC upped its offer May 9 to a package that Barber said included $145 million in cash and 50 percent of the 1992, 1993 and 1994 potential revenue generated by the merged station.

A source close to the case said Group W's appeal was based partially on Conrad's decision to re-open the bidding on May 9. Group W did not counter CNBC's last bid.

FNN's chief executives, in a statement released May 9, said the final CNBC bid was "clearly superior to the last Dow Jones/Group W bid" adding they were "pleased that Judge Conrad made this important decision so promptly."

If it were to lose the bidding war, Westinghouse has said it would consider launching a new business cable channel. Schwartz said "no determination has been made at this point" on that possibility.

CNBC is a subsidiary of the NBC Television Network, which is owned by General Electric Co. FNN filed for chapter 11 bankruptcy protection in March, along with Infotechnology Inc., which owns 46 percent of FNN.

Also last week, FNN announced that it closed the deal to sell its share in the Learning Channel to the Discovery Channel for $11.5 million.