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NBC's Silverman sells production company

A Murdoch daughter buys Reveille, which had raised conflict-of-interest questions.

February 14, 2008|Meg James | Times Staff Writer

NBC Entertainment co-Chairman Ben Silverman on Wednesday sold his television production company to London-based Shine Ltd., owned by media baron Rupert Murdoch's daughter Elisabeth, for $125 million.

Formed in 2002, Reveille is one of the few major independent TV companies that has flourished in an era when media giants control both entertainment production and distribution.

For The Record
Los Angeles Times Saturday, March 15, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 48 words Type of Material: Correction
Sale of production company: An article in the Feb. 14 Business section about the sale of NBC Entertainment co-Chairman Ben Silverman's television production company, Reveille, referred to Grant Tinker as having been head of NBC's entertainment division. Tinker was chairman and chief executive of the entire broadcasting company.

Silverman said the sale was bittersweet. "I love Reveille. It was my baby, and a huge amount of energy, commitment and life force went into building it," Silverman said in an interview. "But I realized that I just wanted to focus 100% on NBC."

The transaction resolves some of the conflicts of interest posed by Silverman's dual role. Until the sale, Silverman had served as the top programming executive charged with picking shows for NBC's prime-time schedule and had been the sole shareholder of Reveille -- an arrangement approved by NBC when it hired the 37-year-old producer in June.

During the last nine months, Reveille has blossomed into one of NBC's most important programming suppliers. It has sold at least 14 shows and scripts to NBC for its prime-time schedule since Silverman joined the network. The flurry of sales boosted Reveille's assets and value.

In the last month, NBC ordered a second season of "American Gladiators," with former pro wrestler Hulk Hogan, a sitcom called "Kath & Kim" and "Nashville Star," a talent show that the USA Network had dropped because of low ratings. "Nashville Star" is set to be resurrected on NBC's prime-time schedule this summer.

Silverman is not the first producer-turned-executive to sell his company.

"You can't be buying programs and selling them at the same time," said Grant Tinker, who is credited with ushering in NBC's golden era of programming as head of its entertainment division. He sold his lucrative interest in MTM Enterprises after taking the job in 1981. "I didn't realize as much value as I could have" in the transaction, he said. He declined to comment on the Silverman situation.

NBC established safeguards after hiring Silverman meant to avoid a conflict of interest. Silverman isn't the only person ordering shows, NBC said. Chief Executive Jeff Zucker makes the final call. "We have full confidence in the way NBC Universal has handled this matter," NBC Universal parent General Electric Co. said Wednesday.

NBC Universal confirmed that it would keep its conflict-of-interest process in place. It will continue to review all Reveille projects because of Silverman's ties to Murdoch and the possibility that he may someday return to the company. Silverman's contract with NBC expires in the summer of 2009.

Silverman is a close friend of Elisabeth Murdoch, the 39-year-old daughter of the News Corp. chairman. Their relationship goes back a decade. Silverman was Elisabeth Murdoch's agent when he worked at the William Morris office in London.

"Lis Murdoch is a dear friend. She was a handpicked buyer and she is the perfect person to look after the company and grow it to the next level," Silverman said in an interview

Murdoch founded Shine, an independent television production company, in 2000, after she left her father's business empire. A little more than a year ago, she began buying other independents to bolster Shine's assets. She was interested in Reveille, in part, because of its budding international distribution business.

Last month, the British Sky Broadcasting satellite TV service, a unit of News Corp., increased its stake in Shine to 11.3% from less than 3% for an undisclosed amount. With the addition of Reveille, Shine becomes the fourth-largest independent television production company in Britain. Under the terms of the acquisition, Silverman will continue to profit from the Reveille-produced sitcom "The Office" for five years, according to people close to the deal. That, they said, could make the deal worth as much as $200 million to Silverman.

Reveille, which is based on NBC Universal's lot in Los Angeles, also produces NBC's "The Biggest Loser" and "Ugly Betty" for Walt Disney Co.'s ABC. Reveille's latest competition show, "My Dad Is Better Than Your Dad," is scheduled to debut on NBC next week.

Along with additional seasons of "American Gladiators" and "The Biggest Loser," NBC also recently bought "America's Favorite Mom" from Reveille. Produced in association with the floral service Teleflora, the show will air only once -- on Mother's Day, May 11.

Last week, instead of the traditional process of ordering a pilot to evaluate a series' chances, NBC committed to six episodes of "Kath & Kim." Several ethics experts questioned NBC's handling of the Silverman situation. Some said NBC would have avoided any conflict by buying Reveille in June, before the surge in sales as Silverman began recommending Reveille shows, or forcing Silverman to immediately divest.

"How do you second-guess a star producer in an artistic venue that is inherently subjective?" asked Thomas Donaldson, a business ethics professor at the Wharton School at the University of Pennsylvania. He called the sale "too little too late."

"Silverman was hired supposedly because he was the master at making such [programming] calls. Which makes it all the more perplexing why NBC didn't do the right thing in the first place."

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meg.james@latimes.com

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