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ENTERTAINMENT

NBC exec to sell show supplier

Silverman agrees to shed the company to avoid possible conflict.

January 19, 2008|Meg James | Times Staff Writer

NBC Entertainment co-Chairman Ben Silverman has agreed to sell his production company, which makes "The Office" and "Ugly Betty," to a London-based firm owned by Elisabeth Murdoch for at least $125 million, people familiar with the situation said Friday.

Silverman put the company, Reveille, up for sale last year to deflect criticism that his dual role as a supplier and buyer of programming was a potential conflict of interest.

Since he joined NBC in June 2007 as its chief creative executive, Reveille has become one of the network's top program suppliers.

Silverman's continued ownership of Reveille opened him to criticism that he might have used his position to favor Reveille shows, possibly enriching himself at the expense of GE shareholders and other studios.

NBC said that was not the case and that it had established safeguards to protect against conflicts of interest.

Murdoch, the 39-year-old daughter of media mogul Rupert Murdoch, is poised to expand Shine Ltd., her 7-year-old independent production firm, which has become a supplier of shows to the BBC, ITV and other British channels.

Acquiring Reveille would give Murdoch an immediate toehold in the U.S. market and a small international distributor of TV shows.

In a speech Wednesday at a media conference in London, Murdoch explained her rationale behind expanding into Hollywood.

"If I were to crack the U.S. market, I would want to get to scale quite quickly. . . . Most importantly, I would want [a company] with deep and significant broadcaster relationships, with an outstanding producing track record, with market leverage and momentum," she said.

Murdoch added that the deal was expected to close in February. She plans to meet this month with Silverman and the Reveille staff in Los Angeles. The company's name will remain unchanged.

NBC and Silverman declined to comment.

Under the deal, Shine would pay an initial $125 million for Reveille, according to one person close to the deal. Provisions in the agreement call for additional payments by Shine that this person said could increase the overall value of the transaction to more than $200 million.

The pending sale of Silverman's company resolves some thorny issues for NBC Universal Inc. but also raises new ones. The media unit owned by industrial giant General Electric Co. did not force Silverman, 37, to sell his stake in Reveille before he joined the company.

After he was tapped to run NBC Entertainment, Silverman began recommending that the network buy Reveille shows.

During the last seven months, NBC has ordered at least 13 shows and scripts from his company, turning the boutique producer into one of NBC's go-to program suppliers.

The first of Reveille's shows that Silverman helped land on NBC's schedule has done well. This month, Reveille's "American Gladiators," a remake of the 1990's syndicated show, premiered on the network to strong ratings.

Just two weeks into its run, NBC announced that it had ordered a second season of "Gladiators" to air this summer. The network picked up another unscripted Reveille show, "Nashville Star," which had been dropped by sister cable channel USA Network.

NBC Universal said it established a review process to identify potential conflicts and to ensure that Silverman wasn't the only person making decisions about whether to buy and schedule Reveille shows. Chief Executive Jeff Zucker makes the final call.

NBC executives are now considering whether they should continue the review process to guard against potential preferential treatment extended to Murdoch, Reveille's soon-to-be owner, according to two executives familiar with the discussions. NBC wants to make sure that checks and balances are in place so that Silverman doesn't favor Murdoch over other TV producers and suppliers because he stands to gain financially by the sale of Reveille.

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meg.james@latimes.com

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