Judge Accepts NBC’s Bid for Troubled FNN

A federal bankruptcy judge Wednesday accepted NBC’s sweetened $115-million bid to acquire the troubled Financial News Network, rejecting a competing offer made by a joint venture of Dow Jones & Co. and Westinghouse Electric Co.

U.S. Bankruptcy Court Judge Francis G. Conrad said he would not accept the Dow Jones-Westinghouse bid, also worth $115 million, because it did not follow rules he established for competitive bids.

The decision is not final because it is still subject to a Federal Trade Commission antitrust review. Nonetheless, it is a setback for the Dow Jones-Westinghouse partnership, which has been repeatedly stymied in its attempt to gain control of the ailing cable TV network.

In a packed New York courtroom ringed by attorneys for both parties, NBC raised its bid to match the partnership’s $115-million offer. But the judge disqualified the partnership’s bid because it expired Wednesday and NBC’s bid does not expire until May 31.

Conrad had previously ruled that any competing bid for FNN had to be identical to NBC’s terms except for the price. NBC officials said they raised their purchase price for FNN to satisfy creditor concerns that the judge had disqualified a better offer.

Officials at Dow Jones and Westinghouse, however, expressed confidence that the FTC will rule that NBC’s bid violates antitrust rules. The FTC has said it will decide the case by April 19. If it rules against NBC, then the case will be fought in the same U.S. Bankruptcy Court that favored the network Wednesday.

The battle for FNN is the latest twist in the cable channel’s turbulent history. FNN’s troubles began last fall after a series of damaging financial disclosures resulted in FNN and its parent company, Infotechnology Inc., filing for bankruptcy.

A new management team brought in late last year put FNN and Infotechnology’s other assets, including 97% ownership of United Press International, up for sale.

NBC owns the Consumer News and Business Channel, a business news cable TV channel available in 18 million households. The network reached a definitive agreement in February to purchase FNN for $105 million and plans to merge it with CNBC. That deal topped a previous $90-million bid from the Dow Jones-Westinghouse partnership.

But on March 20, the partnership came back with a revised offer of $115 million. Subsequently, 15 state attorneys general filed a petition asking the Bankruptcy Court to reject the network’s bid on antitrust grounds.

Tom Rogers, president of NBC Cable, dismissed claims that NBC’s bid for FNN violated antitrust rules.

“The fact that you go from two to one channels means absolutely nothing,” he said. “The issue is how highly competitive the marketplace is already. We compete among all kinds of services for access to cable systems and advertising.”

All sides in the tug-of-war over FNN rejected the suggestion that they put aside their fight and agree jointly to operate and own a combined business news cable channel. Although such a venture would reduce each of the partners’ risk in the still unprofitable channels, they have said they were not interested in a three-way partnership.