DEL.ICIO.USTurner CEO denies Hawks, Thrashers deal with Texan
The Atlanta Journal-Constitution
Friday, October 10, 2008
Turner Broadcasting System CEO Phil Kent testified Friday there was never a firm deal to sell 85 percent of the Atlanta Hawks, Thrashers and Philips Arena operating rights to Texas businessman David McDavid.
Kent was on the stand in the second day of court arguments over McDavid’s $500 million breach-of-contract lawsuit against the company.
Jessica McGowan / AJC
Turner Broadcasting System CEO Phil Kent took the stand in the second day of court arguments in a $500 million breach-of-contract lawsuit against the company.
Turner has said it did nothing wrong when it decided to sell the teams and arena rights to an eight-man group known as the Atlanta Spirit in September 2003, even though it had been negotiating with McDavid since April. McDavid had offered $350 million. The Spirit group — which includes two relatives of Ted Turner, the founder of Turner Broadcasting — paid $250 million.
Besides breach of contract, McDavid is accusing Turner of passing his confidential financial information on to the Atlanta Spirit, which agreed to buy the teams.
Lamar Mixson, an attorney for McDavid, peppered Kent with questions at the trial in Fulton County Superior Court. Among them were:
• Why there was a draft internal memo to employees saying Turner had “reached final agreement with David McDavid” for sale of the professional sports teams as well as the arena operating rights?
• Why did Turner executives, including Stan Kasten, then the president of Turner’s sports teams, consult with McDavid and his brother-in-law over contracts for the Hawks’ prospective general manager and coach?
• And, why did the Atlanta Spirit insist that Turner pay a $10 million breakup fee if its purchase agreement was terminated in favor of McDavid’s agreement?
During about two hours of testimony, Kent said that it is “standard operating procedure” for Turner to write internal and external press releases in advance, but that “it doesn’t mean that I saw it and it doesn’t mean … that we were in agreement.”
And, speaking with McDavid about major hires was a “courtesy,” not an indication that they were managing the Hawks and Thrashers, Kent said.
“I had to approve the deals, but we were trying to make sure the McDavid group knew what we were doing and didn’t have any problems with what we were doing,” he said.
With regard to the breakup fee — a common part of a sale or a merger — Kent at first said he wasn’t a part of that discussion, which was handled by lower-level executives.
“Are you telling me as chief executive officer of Turner Broadcasting System you didn’t know about the $10 million breakup fee?” Mixson asked. Mixson noted that court filings include an e-mail seeking approval from Kent for the hiring of a Hawks trainer for $125,000.
“You remember approving this $10 million breakup fee,” Mixson said.
Kent acknowledged that he did but pointed out that the events were five years ago. He also said he didn’t remember the “exact discussion” behind why Turner would agree to pay a breakup fee.
“You are the chief executive officer of a division of one of the largest companies in the world, and you’re telling me you don’t know why Turner agreed to pay the $10 million?” Mixson asked.
Kent said he was confident the deal was being handled by other executives and would be looked at by corporate parent Time Warner.
“I don’t want to speculate,” he said after a pause. “I was doing a lot of other things at the time. This was not a large focus of mine.”
Services »
