Al-jazebra Pays Al Gore 500 Millions for His Current TV

(This post is direct from The New York Times.)

Al Jazeera, the pan-Arab news giant, has long tried to convince Americans that it is a legitimate news organization, not a parrot of Middle Eastern propaganda or something more sinister.

It just bought itself 40 million more chances to make its case.

Al Jazeera on Wednesday announced a deal to take over Current TV, the low-rated cable channel that was founded by Al Gore, a former vice president, and his business partners seven years ago. Al Jazeera plans to shut Current and start an English-language channel, which will be available in more than 40 million homes, with newscasts emanating from both New York and Doha, Qatar.

For Al Jazeera, which is financed by the government of Qatar, the acquisition is a coming of age moment. A decade ago, Al Jazeera’s flagship Arabic-language channel was reviled by American politicians for showing videotapes from Al Qaeda members and sympathizers.

Now the news operation is buying an American channel, having convinced Mr. Gore and the other owners of Current that it has the journalistic muscle and the money to compete head-to-head with CNN and other news channels in the United States.

Al Jazeera did not disclose the purchase price, but people with direct knowledge of the deal pegged it at around $500 million, indicating a $100 million payout for Mr. Gore, who owned 20 percent of Current. Mr. Gore and his partners were eager to complete the deal by Dec. 31, lest it be subject to higher tax rates that took effect on Jan. 1, according to several people who insisted on anonymity because they were not authorized to speak publicly. But the deal was not signed until Wednesday.

A spokesman for Al Jazeera said that antitrust regulators had not expressed any objections to the deal.

Going forward, the challenge will be persuading Americans to watch — an extremely tough proposition given the crowded television marketplace and the stereotypes about the channel that persist to this day.

“There are still people who will not watch it, who will say that it’s a ‘terrorist network,’ ” said Philip Seib, the author of “The Al Jazeera Effect.” “Al Jazeera has to override that by providing quality news.”

With a handful of exceptions (including New York City and Washington), American cable and satellite distributors have mostly refused to carry Al Jazeera English since its inception in 2006. While the television sets of White House officials and lawmakers were tuned to the channel during the Arab Spring in 2011, ordinary Americans who wanted to watch had to find a live stream on the Internet.

To change that, Al Jazeera lobbied distributors and asked supporters to write letters to the distributors — but accomplished next to nothing.

Some activists accused distributors like Comcast and DirecTV of blacklisting a channel that is widely respected elsewhere in the world. But the distributors said there was scant evidence that many American viewers wanted to watch.

Current, similarly, has suffered from paltry ratings. “Nobody’s watching,” one of the channel’s prime-time hosts, Eliot Spitzer, quipped to a reporter last month.

Current was conceived in 2005 after Mr. Gore and another co-founder, Joel Hyatt, bought the small cable news channel Newsworld International. After several years in obscurity showing viewer-submitted videos and documentaries, Current tacked to the left in 2011 with the hiring of MSNBC’s Keith Olbermann. A year later, Mr. Olbermann was fired, but a channel made in his image remained, with Mr. Spitzer, Jennifer Granholm and other liberal pundits as hosts. But on a typical night last year, just 42,000 people watched their shows, according to Nielsen.

By selling Current, Mr. Gore and Mr. Hyatt are giving up their vision for an alternative to MSNBC, which has much higher-rated liberal hosts.

Former US Vice-President and Current TV Chairman Al Gore.

On Wednesday, Mr. Hyatt praised Al Jazeera for “bringing large-scale resources to journalism — something which we have not been able to do.” In a letter to Current employees, some of whom are expected to lose their jobs, he said he and Mr. Gore would join the advisory board of the newly rebranded channel.

“We look forward to helping build an important news network,” Mr. Hyatt wrote.

Rather than simply use Current to distribute its existing English-language channel, Al Jazeera said it plans to create a channel based in New York. Tentatively titled Al Jazeera America, roughly 60 percent of the programming will be produced in the United States, while the remaining 40 percent will come from Al Jazeera English.

Al Jazeera, which has bureaus in New York, Washington, Los Angeles, Miami and Chicago, intends to open several more in other American cities.

“There’s a major hole right now that Al Jazeera can fill. And that is providing an alternative viewpoint to domestic news, which is very parochial,” said Cathy Rasenberger, a cable consultant who has worked with Al Jazeera on distribution issues in the past. However, she warned, “there is a limited amount of interest in international news in the United States.”

And others are trying to elbow their way in. News channels financed by Britain, China and Russia are especially hungry for American cable deals. To date, the BBC has had the most success; its BBC World News channel is now available in about 25 million homes thanks to a deal struck last month with Time Warner Cable.

But the takeover of Current brings Al Jazeera to the front of the line. In recent weeks, Mr. Gore personally lobbied the distributors that carry Current on the importance of Al Jazeera, according to people briefed on the talks who were not authorized to speak publicly.

Distributors can sometimes wiggle out of their carriage deals when channels change hands. Most consented to the sale, but Time Warner Cable did not, Mr. Hyatt told employees.

Time Warner Cable had previously warned that it might drop Current because of its low ratings. It took advantage of a change-in-ownership clause and said in a terse statement Wednesday night, “We are removing the service as quickly as possible.”