Report: Gore's $70M Take from Current TV Designed to Avoid Obama Tax Hikes

Thursday, 03 Jan 2013 10:53 PM

 

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Al Gore, who shared the 2007 Nobel Peace Prize for his fight against global warming, may gross about $70 million from the sale of his Current TV network to Al Jazeera, the cable channel funded in part by oil-rich Qatar.

Al Jazeera will pay about $500 million for Current TV, including the stake held by Gore, 64, according to two people with knowledge of the deal. The network is one of dozens of investments made by the former vice president since he lost the 2000 presidential race by a slim margin, Bloomberg reported.

“It’s reeking with irony,” said Jeff Sonnenfeld, senior associate dean at the Yale School of Management, who studies corporate governance. “It seems to be at least a paradox in terms of his positions on sustainability and geopolitics.”

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The deal highlights Gore’s makeover from career politician to successful businessman. His take from the Current TV sale is is many times the maximum net worth of $1.7 million he reported while running for president in 1999. Besides investing in startups, Gore is on the board of Apple Inc. (AAPL), an adviser to Google Inc., according to his website biography, and a partner at Kleiner Perkins Caufield & Byers.

Late Thursday, Fox News and other media reported that the sale seemed to have been rushed to avoid the anticipated fiscal cliff tax increases.

In addition to wanting a buyer who would reflect his political philosophy, Gore was anxious to fulfill his fiduciary responsibility to himself and keep his taxes low, the Washington Times reported.

"A critic of the tax structure that allows the very wealthy, like former Massachusetts Governor Mitt Romney and billionaire tax activist Warren Buffet, to escape the high income tax rates paid by their secretaries, Gore attempted to complete the deal by December 31," the Times reported Thursday. "Because the deal wasn’t signed until today, he and his partners will pay the new 23.8 percent capital gains tax rather than 15 percent, or an extra $8.8 million."

“The green of money knows no political boundaries,” Charles Elson, who is director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, told Bloomberg News. “When you are running investments, your priority needs to be maximizing return.”

Gore’s holdings also include investments in Amazon.com Inc., EBay Inc. and Procter & Gamble Co. through his Generation Investment Management LLP.
2004 Purchase

Gore holds a 20 percent stake in Current TV, according to the people, who asked not to be named because the sale terms aren’t public. His proceeds are difficult to pin down because the company had $41.4 million in debt, as well as preferred stock entitled to $99.5 million in the event of a sale or liquidation, according to a 2008 regulatory filing.

The Current TV price represents a sevenfold increase from the $71 million Gore and his partners paid for the predecessor company in 2004, according to the filing. Gore, chairman, and Joel Hyatt, a co-founder and chief executive officer, announced the sale yesterday in a statement, without providing financial terms.

Kalee Kreider, a spokeswoman for Gore, didn’t respond to a phone call or e-mail request for comment.

“Many Americans are tired of borrowing huge amounts of money from China to buy huge amounts of oil from the Persian Gulf to make huge amounts of pollution that destroys the planet’s climate,” Gore said in September 2006 at the New York University School of Law. “Increasingly, Americans believe that we have to change every part of that pattern.”
Current Investors

The network’s investors included funds controlled by Los Angeles billionaire Ron Burkle and San Francisco money manager Richard Blum, according to the 2008 filing, when the company unsuccessfully sought to sell stock to the public. Blum is married to U.S. Senator Dianne Feinstein, a Democrat from San Francisco.

The Raine Group advised Current TV on the sale.

The owners introduced Current TV in 2005 after purchasing the network from Vivendi SA.

Al Jazeera is closely held and gets some funding from the government of Qatar, a small country on the eastern side of the Arabian Peninsula that gets almost half of its gross domestic product from oil and gas, data compiled by Bloomberg show.

“Under Qatari law, Al Jazeera Media Network is incorporated as a private, non-profit company,” Charlotte Fouch, a spokeswoman, said in an e-mail. “Al Jazeera receives funding from the State of Qatar, much like other publicly funded broadcast networks.”
Gore’s Fund

In February of last year, Gore said investors in oil and gas companies that ignore the cost of carbon dioxide emissions and other greenhouse gases are making a mistake similar to those who invested in subprime mortgages.

Most of Gore’s investments are made through Generation Investment Management, which he co-founded with former Goldman Sachs Group Inc. executive David Blood. The most recent regulatory filing lists about $3.6 billion under management in 29 publicly traded companies.

In addition, Generation Investment Management also has stakes in private ventures such as Nest Labs, a company formed by Apple Inc. alumni to create a thermostat that adapts to user behavior and saves money. The fund also backed Elon Musk’s SolarCity Corp. (SCTY), a developer of rooftop solar power systems that went public last month.
Venture Capital

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In April, Gore’s fund was part of $110 million in venture capital invested in Harvest Power Inc., a closely held company that produces renewable energy from waste such as food scraps.

The former Democratic presidential nominee is also the author of the climate change focused best-sellers “Earth in the Balance,” “An Inconvenient Truth,” “The Assault on Reason” and “Our Choice: A Plan to Solve the Climate Crisis.”

Gore was the co-recipient, with the Intergovernmental Panel on Climate Change, of the 2007 Nobel Peace Prize for “informing the world of the dangers posed by climate change,” according to his official biography.

Gore served in the U.S. House of Representatives from 1977 to 1985 and then in the U.S. Senate until he took office as vice president under Bill Clinton in 1993.

© Copyright 2014 Bloomberg News. All rights reserved.

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