SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
September 10, 1997
------------------
(Date of earliest event reported)
BET HOLDINGS, INC.
------------------
(Exact name of Registrant as specified in its charter)
Delaware 1-10880 52-1742995
-----------------------------------------------------------------
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
One BET Plaza
1900 W Place, N.E.
Washington, D.C. 20018-1211
(Address of principal executive offices, including zip code)
(202) 608-2000
--------------
(Registrant's telephone number, including area code)
_____________________________________________________________
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On September 10, 1997 the Board of Directors of BET
Holdings, Inc. (the "Company" or "BET") received a letter (the
"Letter") from Robert L. Johnson, BET's Chairman and Chief
Executive Officer, and Liberty Media Corporation ("Liberty"), a
major shareholder of BET, to acquire, through a newly formed
entity owned by them, all of BET's outstanding common stock which
they do not own at a price per share of $48.00 cash (the
"Offer"). The Letter states that the Offer will be subject to
financing on terms and conditions acceptable to them and other
terms and conditions customary to transactions of this nature.
On September 16, 1997 the Board of Directors of the
Company announced that it had appointed an independent committee,
consisting of Mr. Delano E. Lewis, to review and report to the
BET Board its evaluation of the Offer.
On or about September 11, 1997, purported class actions
captioned Behrens v. Robert L. Johnson et al., C.A. No. 15921
N.C., Harbor Finance Partners v. Peter R. Barton et al., C.A. No.
15923 N.C., Tiger Options, L.L.C. v. Robert L. Johnson et al.,
C.A. No. 15936, Friedman v. Robert L. Johnson et al., C.A. No.
15924 N.C., and Ramos v. Robert L. Johnson et al., C.A. No. 15941
N.C. were filed in the Court of Chancery of the State of Delaware
in and for New Castle County. The complaints name as defendants
BET and members of its Board of Directors. Three of the
complaints also name as defendants Liberty and one of those
complaints also names Tele-Communications Inc. ("TCI") as a
defendant. The complaints allege, among other things, that the
proposed transaction is the product of unfair dealing, that the
proposed purchase price is grossly inadequate, that the
individual defendants, as well as defendants TCI and Liberty have
breached fiduciary duties owing to the holders of the Company's
Class A Common Stock including in failing to disclose material
information, and that defendants have further breached their
fiduciary duties by acting in a manner designed to benefit
themselves at the expense of the public holders of the Company's
Class A Common Stock. The complaints seek preliminary and
permanent injunctive relief, rescission in the event the
transaction is consummated and compensatory damages. The Company
believes that the claims are meritless and intends to defend them
vigorously.
The above summaries of the Offer and the purported
class actions are qualified in their entirety by reference to the
complete text of the Letter and the purported class action
complaints, which are filed herewith as exhibits 99.1 and 99.3,
respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBIT NUMBER
--------------
99.1 Letter to the Board of Directors of BET Holdings, Inc.
dated September 10, 1997 from Robert L. Johnson and
Liberty Media Corporation.
99.2 Press Release dated September 16, 1997 entitled "BET
HOLDINGS' BOARD APPOINTS COMMITTEE TO REVIEW ROBERT L.
JOHNSON AND LIBERTY MEDIA OFFER".
99.3(a) Behrens v. Robert L. Johnson et al., C.A. No. 15921
N.C.
99.3(b) Harbor Finance Partners v. Peter R. Barton et al., C.A.
No. 15923 N.C.
99.3(c) Tiger Options, L.L.C. v. Robert L. Johnson et al., C.A.
No. 15936
99.3(d) Friedman v. Robert L. Johnson et al., C.A. No. 15924
N.C.
99.3(e) Ramos v. Robert L. Johnson et al., C.A. No. 15941 N.C.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
BET HOLDINGS, INC.
Date: September 23, 1997 By: /s/ Debra L. Lee
----------------------------
Name: Debra L. Lee
Title: President and Chief
Operating Officer
EXHIBIT INDEX
The following exhibits are attached hereto and
incorporated by reference:
99.1 Letter to the Board of Directors of BET Holdings, Inc.
dated September 10, 1997 from Robert L. Johnson and
Liberty Media Corporation.
99.2 Press Release dated September 16, 1997 entitled "BET
HOLDINGS' BOARD APPOINTS COMMITTEE TO REVIEW ROBERT L.
JOHNSON AND LIBERTY MEDIA OFFER".
99.3(a) Behrens v. Robert L. Johnson et al., C.A. No. 15921
N.C.
99.3(b) Harbor Finance Partners v. Peter R. Barton et al., C.A.
No. 15923 N.C.
99.3(c) Tiger Options, L.L.C. v. Robert L. Johnson et al., C.A.
No. 15936
99.3(d) Friedman v. Robert L. Johnson et al., C.A. No. 15924
N.C.
99.3(e) Ramos v. Robert L. Johnson et al., C.A. No. 15941 N.C.
EXHIBIT 99.1
Robert L. Johnson Liberty Media Corporation
2915 Audubon Terrace, N.W. 8101 East Prentice Avenue, Suite 500
Washington, DC 20018 Englewood, CO 80111
September 10, 1997
Board of Directors
BET Holdings, Inc.
One BET Plaza
1900 W Plaza N.E.
Washington, D.C. 20018-1211
Dear Sirs:
We are hereby making an offer pursuant to which a new
corporation ("Newco") to be formed by Robert L. Johnson (or a
corporation, partnership or other entity owned by Mr. Johnson)
and Liberty Media Corporation ("Liberty") would acquire (the
"Acquisition") all of the capital stock of BET Holdings, Inc.
(the "Company") not already owned by them at a price per share of
$48 in cash.
Consummation of the proposed transaction would be
subject to, among other things, the negotiation and execution of
definitive merger and other agreements and the receipt of
financing on terms and conditions acceptable to each of us. Such
definitive merger and other agreements would provide, among other
things, that the obligations of the parties to consummate the
Acquisition will be subject to the satisfaction of a number of
conditions customarily contained in transactions of this type.
In connection with the proposed Acquisition, we have retained
Salomon Brothers Inc. to provide financial advice and to assist
us in raising the funds necessary to consummate the Acquisition.
We and our advisors are prepared to meet with the Board
or any special committee formed by it to consider our proposal,
their advisors, and the Company's management and advisors in
order to answer any questions about our proposal and to present
definitive merger and other agreements for prompt consideration
and execution. We assume that you will want to make a prompt
announcement of our proposal. We are, however, of the view that
it is in the best interest of the Company's shareholders that
they be made aware of our proposal as promptly as possible, and
will therefore release this letter publicly shortly after it is
delivered to you and we will also be making appropriate filings
to comply with our obligations under the federal securities laws.
We hope that the Board will give this offer serious
consideration. As you can appreciate, with offers of this kind
time is of the essence. Accordingly, if you wish to pursue a
possible transaction, please contact Mr. Johnson as soon as
possible to discuss these matters further.
Very truly yours,
/s/ Robert L. Johnson
_____________________________
Robert L. Johnson
LIBERTY MEDIA CORPORATION
By: /s/ Robert R. Bennett
__________________________
Name: Robert R. Bennett
Title: President and Chief
Executive Officer
EXHIBIT 99.2
For Immediate Release
September 16, 1997
BET HOLDINGS' BOARD APPOINTS COMMITTEE TO REVIEW
ROBERT L. JOHNSON AND LIBERTY MEDIA OFFER
Washington, D.C. -- BET Holdings, Inc. (BET) today
announced that its Board of Directors has appointed an
independent committee, consisting of Delano E. Lewis, to review
and report to the BET Board of Directors its evaluation of the
offer from BET's Chairman and Chief Executive Officer, Robert L.
Johnson, and Liberty Media Corp., to acquire all of BET's
outstanding common stock, which they do not own, at a price of
$48 per share in cash, through a new corporation.
Mr. Lewis has been a director of BET since 1994. He
has been President and Chief Executive Officer of National Public
Radio since January 1994. From January 1990 to January 1994, Mr.
Lewis served as Chief Executive Officer of C&P Telephone Company,
a subsidiary of Bell Atlantic. From July 1988 to January 1990,
Mr. Lewis was President of C&P Telephone Company. Mr. Lewis also
serves as a director of Colgate Palmolive, Guest Services and
Halliburton Company.
BET Holdings, Inc., a media-entertainment company
publicly traded on the New York Stock Exchange (NYSE:BTV), owns
and operates Black Entertainment Television, the nation's first
and only national television network providing a platform for
quality programming targeted toward African American viewers.
BET is currently seen in more than 51 million cable households as
reported by Nielsen Media Research. Recently recognized as the
"Company of the Year" by Black Enterprise magazine, BET Holdings,
Inc. also owns and/or operates BET On Jazz: The Cable Jazz
Channel , BET Movies/STARZ!3, BET Action Pay Per View, Emerge and
BET Weekend magazines, BET Financial Services, MSBET (a
Microsoft/BET joint venture) and BET SoundStage restaurant.
###
Contact: Debra Lee, President and Chief Operating Officer,
BET or Michele Moore, Media Relations and
Publicity, BET, 202/608-2003
EXHIBIT 99.3(a)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-------------------------------------x
: C.A. No. 15921NC
HERBERT BEHRENS, :
:
Plaintiff, :
: CLASS ACTION
-against- : COMPLAINT
:
ROBERT L. JOHNSON, JOHN C. MALONE, :
PETER R. BARTON, DELANO E. LEWIS, :
SHEILA CRUMP JOHNSON, HERBERT P. :
WILKINS, DENZEL WASHINGTON, TELE- :
COMMUNICATIONS, INC., LIBERTY MEDIA :
CORPORATION and BET HOLDINGS, INC., :
:
Defendants. :
-------------------------------------x
Plaintiff, by his attorneys, alleges upon information
and belief, except as to paragraph 1 which plaintiff alleges upon
knowledge, as follows:
1. Plaintiff Herbert Behrens is a stockholder of
defendant BET Holdings, Inc. ("BET Holdings" or the "Company").
2. Defendant BET Holdings is a corporation duly
organized and existing under the laws of the state of Delaware,
with its principal offices located at One BET Plaza, 1900 W Place
Northeast, Washington, D.C. 20018. As of November 1996, there
were approximately 16.75 million shares of BET Holdings common
stock outstanding. BET Holdings is a holding company with
subsidiaries which operate predominantly in the cable television
programming industry. The Company's cable television programming
operations are conducted through Black Entertainment Television
("BET"), BET on Jazz: The Cable Jazz Channel and Action Pay-Per-
View. The Company derives a large portion of its revenues
through the BET cable network.
3. Defendant Tele-Communications, Inc. ("TCI") is a
corporation duly organized and existing under the laws of the
State of Delaware with its principal offices located at Terrace
Tower II, 5619 DTC Parkway, Englewood, Colorado 80111. TCI is
the largest owner/operator of cable television systems in the
United States. TCI also produces, acquires and distributes
programming through its wholly-owned subsidiary defendant Liberty
Media Corporation ("Liberty"). TCI, either directly or through
it subsidiaries, owns 18.1% of the outstanding Class A common
stock of BET Holdings, 100% of the outstanding Class B common
stock and controls 26.3% of the vote of all classes of common
stock.
4. Defendant Robert L. Johnson ("Johnson") is the
founder of BET, the Company's primary operating facility.
Defendant Johnson has served as President, Chief Executive
Officer and a director of BET since it was created in 1979.
Since 1991, Johnson has served as Chairman of the Board of
Directors. Since 1991, Johnson also served as Chief Executive
Officer of BET Holdings and as its President from 1991 until
March 1996. Defendant Johnson is also the Chairman of District
Cablevision, Inc. ("DCI"), a Washington D.C. cable system
operating company which he founded in 1980. Johnson has also
served as a director of Liberty, a wholly owned subsidiary of
defendant TCI, since December 1991. According to BET Holding's
most recent Proxy Statement, Johnson owned approximately 21.8% of
the outstanding Class A common stock of BET Holdings, 100% of the
Class C common stock and controlled 65.7% of the vote of all
classes of common stock. On August 1, 1997, it was reported that
Johnson had cut his stake in BET Holdings to 46% by selling
71,007 class A common shares at prices ranging from $33.25 to
$33.88 per share.
5. Defendant John C. Malone ("Malone") has been a
director of BET since 1979 and was its Chairman from 1979 to
1991. Malone has been the President and Chief Executive Officer
of defendant TCI since 1973 and a director and Chairman of the
Board of Liberty since 1991.
6. Defendant Peter R. Barton has been a director of
BET Holdings and of BET since January of 1992. Barton has been
the President and a director of Liberty since 1990. Barton is
Liberty's nominee on the Company's Board. From 1986 through
1990, Barton served as a consultant to TCI and a director of QVC
Network, Inc. From 1988 until March 1991, Barton served as
Senior Vice President of TCI. Barton also sits on the boards of
Turner Broadcasting System, Inc. and Home Shopping Network.
7. Defendant Sheila Crump Johnson ("S. Johnson") is
the wife of defendant Johnson. S. Johnson has served on the
Board of Directors of BET since 1979 and since 1990, has been
Vice President, Corporate Affairs of BET. Since September of
1992, she has served as Executive Vice President, Corporate
Affairs of BET Holdings.
8. Defendant Herbert P. Wilkins, Sr., Delano E. Lewis
and Denzel Washington are the remaining members of the board of
BET Holdings. They, together with Johnson, Malone, Barton and S.
Johnson are sometimes referred to herein as the "Individual
Defendants".
9. The Individual Defendants as officers and/or
directors of BET Holdings have a fiduciary relationship and
responsibility to plaintiff and the other common public
stockholders of BET Holdings and owe to plaintiff and the other
class members the highest obligations of good faith, loyalty,
fair dealing, due care and candor.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action on his own behalf and
as a class action, pursuant to Rule 23 of the Rules of the Court
of Chancery, on behalf of all common stockholders of BET
Holdings, or their successors in interest, who are being and will
be harmed by defendants' actions described below (the "Class").
Excluded from the Class are defendants herein and any person,
firm, trust, corporation, or other entity related to or
affiliated with any of defendants.
11. This action is properly maintainable as a class
action because:
(a) The Class is so numerous that joinder of all
members is impracticable. There are hundreds of BET Holdings
stockholders of record who are located throughout the United
States;
(b) There are questions of law and fact which are
common to the Class and which predominate over questions
affecting any individual Class members, including: whether
defendants have engaged or are continuing to act in a manner
calculated to benefit themselves at the expense of the BET
Holdings public stockholders; and whether plaintiff and the other
Class members would be irreparably damaged if the defendants are
not enjoined in the manner described below;
(c) Plaintiff is committed to prosecuting this
action and has retained competent counsel experienced in
litigation of this nature. The claims of plaintiff are typical
of the claims of the other members of the Class and plaintiff has
the same interests as the other members of the Class.
Accordingly, plaintiff is an adequate representative of the Class
and will fairly and adequately protect the interests of the
Class; and
(d) Plaintiff anticipates that there will be no
difficulty in the management of this litigation.
12. For the reasons stated herein, a class action is
superior to other available methods for the fair and efficient
adjudication of this controversy and the requirements of Rule 23
of the Chancery Court Rules are satisfied.
CLAIM FOR RELIEF
13. BET was founded in 1979 by defendant Johnson.
BET's formation was funded in part by defendant Malone through
TCI. TCI paid Johnson $180,000 for 20% of BET's equity and
loaned Johnson $320,000. During November of 1991, BET Holdings
issued 2,102,500 shares of Class A common stock through an
initial public stock offering. BET, through which BET Holdings
realizes a substantial portion of its revenues, has been a
wholly-owned subsidiary of BET Holdings since 1991.
14. TCI currently owns 18.1% of the outstanding Class
A common stock of BET Holdings and controls 26.3% of the vote.
Johnson, until recently, owned 21.8% of the outstanding Class A
common stock of BET Holdings and controlled 65.7% of the vote.
As of August 1, that stake was cut to 46%.
15. On or about September 11, 1997, it was announced
that TCI, Liberty and Johnson ("the Buyout Group") offered to
acquire the shares of BET Holdings they do not already own for
$48 per share in cash in exchange for each outstanding share of
BET Holdings.
16. As set forth above, BET Holdings has seven board
members, at least four of whom have loyalties that are, at best,
divided in the instant transaction. Furthermore, five of the
directors of BET Holdings are elected exclusively by holders of
Class B and Class C common stock of BET Holdings -- all of which
is owned by either TCI or Johnson. The Individual Defendants are
beholden to Johnson, TCI and Malone and can not be expected to
act in the best interest of BET Holdings' minority stockholders.
17. The purpose of the proposed acquisition
transaction is to enable the Buyout Group to acquire the shares
of BET Holdings they do not already own and BET Holdings'
valuable assets for the benefit of the Buyout Group at the
expense of the BET Holdings' public stockholders.
18. The proposed acquisition comes at a time when BET
Holdings has performed well and is expected to continue to
perform well. The core operations of BET Holdings have reported
consistently improving growth in revenues and earnings and
defendants have made clear through public statements and filings
BET Holdings' efforts to capitalize upon the strength of the BET
brand name by diversifying into other areas, including leisure
activities, financial services and the cosmetics and apparel
industry. The Buyout Group has timed this transaction to capture
BET Holdings' positive performance and future potential and use
it to their own ends, without paying an adequate or fair price
for BET Holdings' remaining shares.
19. On June 11, 1997, BET Holdings reported quarterly
financial results for its third fiscal quarter. The Company
reported net income of $1.09 for the nine months ended April 30,
as compared with $.89 in the prior year, and $.36 for the
quarter, as compared with $.30 in the prior year. Revenues for
the quarter were $40,909,000. BET Holdings attributed its slowed
earnings growth to start up costs associated with pursuing its
growth strategy but added that "it expects its investments to
position it for future earnings growth and increased shareholder
value."
20. In March of 1997, BET Holdings reported that
earnings for its second fiscal quarter ended January 31 rose 14%
to $16.6 million ($.38 per share) from $5.8 million ($.32 per
share) in the same period of 1996. Revenues for the quarter were
$36.6 million, up 11% from $32.9 million in 1996's second
quarter. In a Company press release, Johnson commented, "We are
pleased that BET Holdings, Inc., led by our core business, BET,
continued to report revenue, earnings and cash flow growth as it
made strategic investments to position the company for future
growth. During the quarter we made significant progress toward
expanding our cable programming presence and pursuing brand
extension opportunities...."
21. Likewise, for the first fiscal quarter of its
fiscal year ended July 31, 1997, BET Holdings reported earnings
per share of $.35, up 32% from the prior year's first quarter.
Commenting on those results, defendant Johnson again stressed
increases in future profitability: "We are pleased that our core
business, BET, reported an exceptional 25 percent increase in
operating income during the quarter. BET's outstanding financial
performance permits us to continue implementing our strategy of
pursuing investments in other cable programming and brand
extension opportunities...."
22. TCI and Johnson are in a position of control and
power over BET Holdings and have access to internal financial
information about BET Holdings, its true value, expected increase
in true value and the benefits to the Buyout Group of 100%
ownership of BET Holdings to which plaintiffs and the Class
members are not privy. TCI and Johnson are using their positions
of control and access to non-public information to benefit
themselves in this transaction, to the detriment of the BET
Holdings' common stockholders.
23. In proposing the merger, the Buyout Group has
committed or threatened to commit the following acts to the
detriment and disadvantage of BET Holdings' public stockholders:
(a) They have undervalued the BET Holdings common
stock by ignoring the full value of its assets and future
prospects. The prospered acquisition consideration does not
reflect the value of BET Holdings' valuable assets; and
(b) They timed the announcement of the proposed
buyout to place an artificial lid on the market price of BET
Holdings' common stock which is unfair to BET Holdings' public
stockholders.
24. As a result of the foregoing, plaintiff and the
other members of the Class will be irreparably harmed in that
they will not receive their fair portion of the value of BET
Holdings' assets and business and will be prevented from
obtaining the real value of their equity ownership of the
Company. Unless the proposed acquisition is enjoined by the
Court, defendants will continue to breach their fiduciary duties
owed to plaintiff and the members of the Class and will
consummate the proposed acquisition, to the irreparable harm of
the members of the Class.
25. Plaintiff and the other members of the Class have
no adequate remedy at law.
WHEREFORE, plaintiff prays for judgment and relief as
follows:
A. Ordering that this action may be maintained as a
class action and certifying plaintiff as the Class
representative;
B. Preliminarily and permanently enjoining the
defendants and their counsel, agents, employees and all persons
acting under, in concert with, or for them, from proceeding with,
consummating or closing the proposed transaction.
C. In the event the proposed transaction is
consummated, rescinding it and setting it aside;
D. Awarding compensatory damages against defendants
individually and severally in an amount to be determined at
trial, together with prejudgment interest at the maximum rate
allowable by law;
E. Awarding costs and disbursements, including
plaintiff's counsel's fees and experts' fees; and
F. Granting such other and further relief as to the
Court may seem just and proper.
ROSENTHAL, MONHAIT, GROSS &
GODDESS, P.A.
BY:__________________________________________
Joseph Rosenthal
Kevin Gross
919 North Market Street
Suite 1401, Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
OF COUNSEL:
ABBEY, GARDY & SQUITIERI, LLP
212 East 39th Street
New York, New York 10016
(212) 889-3700
EXHIBIT 99.3(b)
IN THE COURT CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-----------------------------------x
:
HARBOR FINANCE PARTNERS, :
:
Plaintiff, :
:
- against - :
: C.A. No. 15923-NC
PETER R. BARTON, HERBERT P. :
WILKINS, SR., ROBERT L. JOHNSON, :
JOHN C. MALONE, DENZEL WASHINGTON, :
DELANO E. LEWIS, SHEILA CRUMP :
JOHNSON, and BET HOLDINGS, INC., :
:
Defendants. :
:
-----------------------------------x
CLASS ACTION COMPLAINT
Plaintiff, for its complaint against defendants,
alleges upon information and belief, except as to paragraph 2
which is alleged upon knowledge, as follows:
NATURE OF THE ACTION
1. Plaintiff brings this action individually and as a
class action on behalf of all persons, other than defendants, who
own Class A Common Stock of BET Holdings, Inc. ("BET" or the
"Company") and who are similarly situated, for injunctive and
other appropriate relief in connection with a proposal by an
investor group which includes Robert L. Johnson ("Johnson"), its
Chairman and Chief Executive Officer, and Liberty Media Corp.
("Liberty"). Johnson and Liberty together control a majority of
BET's outstanding voting power. The investor group proposes to
acquire all of the issued and outstanding shares of BET Class A
Common Stock, which they do not own. Alternatively, in the event
that the transaction is consummated, plaintiff seeks to recover
rescissory and/or compensatory damages caused by the breach of
fiduciary duties owed by defendants to BET's minority public
shareholders.
PARTIES
2. Plaintiff is and has been a continuous owner of
shares of BET Class A Common Stock at all relevant times
described herein.
3. BET is a corporation duly organized and existing
under the laws of the State of Delaware, with its principal
offices located at One BET Plaza, 1900 W. Place NE, Washington,
D.C. As of October 28, 1996, the Company had approximately
10,125,000 shares of Class A Common Stock outstanding. The
officers and directors of BET own approximately 22% of its Class
A Common Stock. In addition, Johnson owns 100% of BET's Class C
Common Stock and a wholly-owned subsidiary of Liberty owns 100%
of BET's Class B Common Stock. BET owns and operates Black
Entertainment Television, a national network that broadcasts over
cable television.
4. Defendant Liberty is a corporation duly organized
and existing under the laws of the State of Delaware. Liberty
controls 100% of the Company's outstanding Class B Common Stock,
and approximately 18% of its Class A Common Stock, through direct
or indirect wholly owned subsidiaries.
5. Defendant Johnson at all times material hereto has
been the Company's Chairman of the Board and Chief Executive
Officer. Johnson beneficially owns approximately 22% of the
outstanding Class A Common Stock and 100% of the Class C Common
Stock of the Company.
6. Defendant Peter R. Barton ("Barton") at all times
material hereto has been a director of the Company and President
and a director of Liberty. Barton beneficially owns 5,000 shares
of BET's Class A Common Stock.
7. Defendant Herbert P. Wilkins, Sr. ("Wilkins") at
all times material hereto has been a director of BET.
8. Defendant John C. Malone ("Malone") at all times
material hereto has been a director of the Company and Chairman
and a director of Liberty.
9. Defendant Denzel Washington ("Washington") at all
times material hereto has been a director of the Company.
10. Defendant Delano E. Lewis ("Lewis") at all times
material hereto has been a director of the Company.
11. Defendant Sheila Crump Johnson ("Sheila Johnson")
at all times material hereto has been a director of the Company.
She is Johnson's wife.
12. The holders of the Company's Class A Common Stock
elected two of the members of BET's current Board and the holders
of the Class B and C Common Stock, voting together as a single
class, elected five directors. Therefore, the owners of the Class
B and C Common Stock, Johnson and Liberty, control the Company
and its Board.
13. The defendants, by reason of their corporate
directorships and/or executive positions, and as controlling
shareholders in the case of Liberty and Johnson, are fiduciaries
to and for the Company's minority shareholders, which fiduciary
relationship requires them to act with entire fairness and the
utmost good faith in dealing with BET's minority shareholders.
CLASS ACTION ALLEGATIONS
14. Plaintiff brings this action individually on its
own behalf and as a class action, on behalf of all stockholders
of the Company (except the defendants herein and any person,
firm, trust, corporation, or other entity related to or
affiliated with any of the defendants) and their successors in
interest, who are or will be threatened with injury arising from
defendants' actions as more fully described herein (the "Class").
15. This action is properly maintainable as a class
action because:
(a) the Class is so numerous that joinder of all
members is impracticable. There are hundreds of shareholders who
hold the approximately 10,125,000 shares of BET Class A Common
Stock outstanding;
(b) there are questions of law and fact which are
common to the Class including, inter alia, the following:
i) whether the proposed transaction is
grossly unfair to the public stockholders of BET;
ii) whether defendants have breached their
fiduciary and other common law duties owned by them to plaintiff
and the members of the Class; and
iii) whether plaintiff and the other members
of the Class would be irreparably damaged were the transaction
complained of herein consummated;
(c) plaintiff is a member of the Class and is
committed to prosecuting this action. Plaintiff has retained
competent counsel experienced in litigation of this nature. The
claims of plaintiff are typical of the claims of other members of
the Class, and plaintiff has the same interests as the other
members of the Class. Plaintiff does not have interests
antagonistic to or in conflict with those he seeks to represent.
Plaintiff is an adequate representative of the Class;
(d) the prosecution of separate actions by
individual members of the Class would create the risk of
inconsistent or varying adjudications with respect to individual
members of the Class which would establish incompatible standards
of conduct for defendants, or adjudications with respect to
individual members of the Class which would as a practical matter
be dispositive of the interests of the other members not parties
to the adjudications or substantially impair or impede their
ability to protect their interests; and
(e) the defendants have acted, or refused to act,
on grounds generally applicable to, and causing injury to, the
Class and, therefore, preliminary and final injunctive relief on
behalf of the Class as a whole is appropriate.
SUBSTANTIVE ALLEGATIONS
16. On or about September 11,1997, Liberty and Johnson
(the "Buyout Group"), offered to acquire the Company's
outstanding shares of Class A Common Stock, which they do not
already own, for $48 per share in cash (the "Buyout
Transaction").
17. The purpose of the Buyout Transaction is to enable
the Buyout Group to acquire one hundred percent (100%) equity
ownership of BET and its valuable assets for their own benefit at
the expense of BET's public stockholders who will be deprived of
their equity investment and the benefits thereof including, among
other things, the expected growth in the Company's profitability.
18. The Buyout Transaction is the product of unfair
dealing, and the price to be paid to Class members is unfair and
inadequate because, among other things.
(a) The announcement of the proposed Buyout
Transaction was made when the Company is posed for significant
future growth and earnings. Indeed, on June 11, 1997, the Company
reported earnings per share of $.36 for the third quarter of its
fiscal year ending July 31, 1997, compared with earnings per
share of $.30 for the third quarter of its fiscal year ended July
31, 1996, an increase of 20%. For the nine months ended April 30,
1997, earnings per share were $1.09, compared with earnings per
share of $.89 for the nine months ended April 30, 1996, an
increase of 22 percent.
Commenting on the quarterly results, Johnson stated:
"We are pleased with the outstanding operating results
reported by our core business, BET Cable Network. During
the quarter, BET continued to prove its compelling appeal as
it attracted 2.2 million new subscribers, including
subscribers to Direct TV, which ensures BET's carriage on
all three major satellite delivered programming services.
BET's financial success continues to provide us with the
means necessary to pursue our strategy of expanding our
cable programming presence and pursuing brand extension
opportunities in businesses that are compatible with our
primary business of providing entertainment, merchandise,
and leisure time activities to the black consumer
marketplace...."
(b) Because the Buyout Group has an overwhelming
controlling interest in the Company's common stock, no third
party will likely bid for BET. Moreover, none of the directors of
BET, all of whom are members of, affiliated with or beholden to
the Buyout Group, can meaningfully consider the Buyout
Transaction or engage in the equivalent of arm's-length
bargaining with the Buyout Group. The Buyout Group will be able
to proceed with the Buyout Transaction without an auction or
other type of market check to maximize value for BET's public
shareholders; and
(c) The Buyout Group timed the announcement of the
Buyout Transaction to place an artificial lid or cap on the
market price for BET's stock to enable them to acquire the
minority stock at the lowest possible price.
19. By reason of their positions with BET and
Liberty's controlling ownership of the Company, defendants are in
possession of non-public information concerning the financial
condition and prospects of BET, and especially the true value and
expected increased future value of BET and its assets, which they
have not disclosed to BET's public stockholders.
20. The proposed Buyout Transaction is wrongful,
unfair and harmful to BET's public stockholders, and represents
an effort by defendants to aggrandize their own financial
position and interests at the expense of and to the detriment of
Class members. The Buyout Transaction is an attempt to deny
plaintiff and the other members of the Class their right to share
proportionately in the true value of BET's valuable assets,
future growth in profits, earnings and dividends, while usurping
the same for the benefit of the Buyout Group on unfair and
inadequate terms.
21. Defendants, in failing to disclose the material
non-public information in their possession as to the value of
BET's assets and the full extent of the future earnings potential
of BET and its expected increase in profitability, have breached
and are breaching their fiduciary duties to the members of the
Class.
22. As a result of defendants' unlawful actions,
plaintiff and the other members of the Class will be damaged in
that they will not receive their fair portion of the value of
BET's assets and business and will be prevented from obtaining
the real value of their equity ownership of the Company.
23. Unless the proposed Buyout Transaction is enjoined
by the Court, defendants will continue to breach their fiduciary
duties owned to the plaintiff and the members of the Class, will
not engage in arm's-length negotiations on the terms of the
Buyout Transaction, will consummate and close the transaction
complained of to the irreparable harm of the members of the
Class.
24. Plaintiff and the other members of the Class have
no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this action to be a proper class action
and certifying plaintiff as the representative of the Class;
(b) granting preliminary and permanent injunctive
relief against consummation of the Buyout Transaction as
described herein;
(c) in the event the Buyout Transaction is
consummated, rescinding the Buyout Transaction and/or awarding
rescissory damages to the Class;
(d) ordering defendants, jointly and severally, to
account to plaintiff and other members of the Class for all
damages suffered and to be suffered by them as the result of the
acts and transactions alleged herein;
(e) awarding plaintiff the costs and disbursements of
the action including allowances for plaintiff's reasonable
attorneys' and experts' fees; and
(f) granting such other and further relief as the
Court may deem just and proper.
ROSENTHAL, MONHAIT, GROSS &
GODDESS, P.A.
By:________________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
WECHSLER HARWOOD HALEBIAN & FEFFER LLP
805 Third Avenue
New York, New York 10022
(212) 935-7400
EXHIBIT 99.3(c)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-----------------------------------x
:
TIGER OPTIONS, L.L.C, :
:
Plaintiff, :
:
v. :
: CIVIL ACTION NO. 15936
ROBERT L. JOHNSON, JOHN C. MALONE, :
DENZEL WASHINGTON, DELANO E. LEWIS,:
SHEILA CRUMP JOHNSON, PETER R. :
BARTON, HERBERT P. WILKINS, SR., :
BET HOLDINGS, INC. and TELE- :
COMMUNICATIONS, INC., :
:
Defendants. :
:
-----------------------------------x
CLASS ACTION COMPLAINT
Plaintiff, by its attorneys, for its
Complaint alleges, upon information and belief, except
as to the allegations contained in paragraph 2, which
plaintiff alleges upon knowledge, as follows:
NATURE OF ACTION
1. Plaintiff brings this class action on
behalf of itself and all other shareholders of
defendant BET Holdings, Inc. ("BET Holdings" or the
"Company") similarly situated (the "Class") to enjoin
defendants from effectuating an unfair cash-out
acquisition by a management-led buyout group, which
controls a majority of BET Holdings' total shares
outstanding, comprised of the Company's Chairman and
Chief Executive Officer, Robert L. Johnson and Liberty
Media Corporation, which is a wholly-owned subsidiary
of defendant Tele-communications, Inc. ("TCI")
(collectively "the Buyout Group"), designed to force
the sale of the minority shareholders' equity interest
in BET Holdings at a grossly inadequate and unfair
price of $48 per share. As set forth below, pursuant
to the proposed acquisition, the Buyout Group will
acquire the remaining equity interest in the Company.
Moreover, the acquisition proposal is manifestly unfair
as it is substantially below the fair market value of
the Company on a private market basis and/or as a
multiple of said value.
PARTIES
2. Plaintiff Tiger Options, L.L.C. owns
and, at all relevant times, owned shares of BET
Holdings common stock.
3. Defendant BET Holdings is a Delaware
corporation with its principal executive offices
located at One BET Plaza, 1900 W. Place, N.E.,
Washington, DC 20018-1211. BET Holdings operates in
two principal business segments consisting of cable
television programming and magazine publishing.
4. Tele-communications, Inc. ("TCI") is the
largest owner/operator of cable television systems in
the United States. As of October 28, 1996, TCI owned or
controlled 1,831,600 shares of the Company's Class A
stock, or 18% of the total Class A shares outstanding,
and 1,831,800 shares of the Company's Class B stock, or
100% of the total Class B shares outstanding.
5. At all relevant times herein, defendant
Robert L. Johnson ("Johnson") was Chairman of the BET
Holdings Board of Directors ("Board"), and the
Company's Chief Executive Officer. As of October 28,
1996, Johnson owned or controlled 2,244,475 shares of
Class A stock, or 21.8% of the total Class A shares
outstanding, and 4.82 million shares of Class C stock,
or 100% of the total Class C shares outstanding.
6. At all relevant times herein, defendant
Shiela Crump Johnson ("Crump Johnson") was a member of
the Board and Executive Vice President of BET Holdings.
Crump Johnson is married to defendant Johnson.
7. At all relevant times herein, the
following Individual Defendants are also members of the
Board of BET Holdings and/or committees thereof as
follows:
(a) Defendant John C. Malone ("Malone")
is a member of the Board and Chairman and Chief
Executive Officer of TCI.
(b) Defendant Peter R. Barton
("Barton") is a member of the Board and a former
President and Chief Executive Officer of Liberty Media.
(c) Defendant Delano E. Lewis ("Lewis")
is a member of the Board.
(d) Defendant Denzel Washington
("Washington") is a member of the Board.
(e) Defendant Herbert P. Wilkins, Sr.
("Wilkins") is a member of the Board.
8. By virtue of their positions as
directors and/or senior executive officers of BET
Holdings and their exercise of control over its
business and corporate affairs, defendants Johnson,
Crump Johnson, Malone, Barton, Lewis, Washington and
Wilkins (collectively the "Individual Defendants") had,
and at all relevant times, the power to control and
influence, and did control and influence, and cause BET
Holdings to engage in the practices complained of
herein. Each Individual Defendant owes BET Holdings
and its public stockholders fiduciary obligations and
is required to: use his or her ability to control and
manage BET Holdings in a fair, just and equitable
manner; act in furtherance of the best interests of BET
Holdings and its public stockholders; govern BET
Holdings in such a manner as to heed the expressed
views of its public shareholders; refrain from abusing
his or her position of control; provide full disclosure
to the public shareholders; and not favor his or her
own or any other party's interests at the expense of
BET Holdings and its public Shareholders
9. At all relevant times herein, The Buyout
Group owned and controlled a majority of the total
outstanding shares of BET Holdings common stock. Said
defendants have failed to discharge their fiduciary
duties to plaintiff and the other members of the Class
because of the domination and control that it exercises
over the affairs of BET Holdings, along with its
representation on the Company's seven member Board. As
a result of this domination and control, said
defendants have decided to acquire the remaining
outstanding shares of BET Holdings at a grossly
inadequate price to the detriment of the public
shareholders.
CLASS ACTION ALLEGATIONS
10. Plaintiff brings this action pursuant to
Rule 23 of the Rules of the Court of Chancery, for
declaratory, injunctive and other relief on its own
behalf and as a class action on behalf of all public
stockholders of BET Holdings (except defendants herein
and any person, firm, trust, corporation or other
entity related to or affiliated with any of the
defendants) and their successors in interest, who are
being deprived of their equity interest in BET Holdings
by the wrongful acts of the defendants described
herein.
11. This action is properly maintainable as
a class action for the following reasons:
(a) The class of stockholders for whose
benefit this action is brought is so numerous that
joinder of all class members is impracticable. As of
October 28, 1996, BET Holdings had approximately
10,125,205 shares of Class A stock duly issued and
outstanding, which traded on the New York Stock
Exchange, and were owned by thousands of shareholders.
Members of the Class are scattered throughout the
United States.
(b) There are questions of law and fact
that are common to the members of the Class and that
predominate over any questions affecting any individual
members. The common questions include, inter alia, the
following:
i) whether the defendants have
engaged in conduct constituting unfair dealing to
the detriment of the public stockholders of BET
Holdings;
ii) whether the proposed
acquisition proposal by The Buyout Group of $48
per Class A share is unfair to the public
stockholders of BET Holdings because it does not
constitute a fair price for the shares of the
Company; and
iii) whether the defendants have
breached their fiduciary and common law duties
owed by them to plaintiff and the other members of
the Class.
(c) The claims of plaintiff are typical of
the claims of the other members of the Class, and
plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous
prosecution of this action and has retained competent
counsel experienced in litigation of this nature.
Accordingly, plaintiff is an adequate representative of
the Class and will fairly and adequately protect the
interests of the Class.
(e) The prosecution of separate actions
by individual members of the Class would create a risk
of inconsistent or varying adjudications with respect
to individual members of the Class, and that would
establish incompatible standards of conduct for the
party opposing the Class.
(f) Defendants have acted, and are
about to act, on grounds generally applicable to the
Class, thereby making appropriate final injunctive or
corresponding declaratory relief with respect to the
Class as a whole.
CLAIM FOR RELIEF
12. BET Holdings, Inc. operates in two
principal business segments consisting of cable
television programming and magazine publishing. The
Company's cable television programming operations are
conducted by its Entertainment Group which includes BET
Cable Network, BET on Jazz and Action. The Company's
publishing operations are conducted through its
Publishing Group which publishes Emerge magazine.
13. On June 12, 1997, the Company reported
its third quarter 1997 fiscal results. Results were
better than expected, with reported revenue increasing
by 27% to $40.9 million, and net income up 20% to $36
per share. In announcing these results, defendant
Johnson stated:
We are pleased with the outstanding operating
results reported by our core business, the
BET Cable Network. During the quarter, BET
continued to prove its compelling appeal as
it attracted 2.2 million new subscribers,
including subscribers to Direct TV, which
ensures BET's carriage on all three major
satellite delivered programming services.
* * * *
While the start-up costs associated with
pursuing our growth strategy moderate current
earnings, we continue to remain confident
that these investments position the company
for future earnings growth and increased
shareholder value (emphasis added).
14. In response to BET's Holdings' excellent
third quarter results, the investment banking firm of
Donaldson, Lufkin & Jenrette ("DLJ") issued a report
with a "buy" recommendation an the Company's stock.
The report took notice of the Company's "improving
operating trends" and "renewed focus on driving higher
advertising rates." The report went on to state:
The fiscal third quarter (year ends July)
showed clear evidence of improving operating
trends at the core cable network, in
particular, spurred by a renewed focus on
driving higher advertising rates that should
carry through the next quarter and into next
year.
* * * *
We view BET's core programming asset -- the
BET Cable Network -- as increasingly
attractive in the face of an ever-shrinking
pool of independent cable networks that can
offer broadscale coverage in a tight cable
channel capacity environment. The perceived
need for vertical integration by the major
media companies such as News Corp.,
Westinghouse and Disney has sky-rocketed the
demand for distribution, while the cable
industry's sluggishness in converting to
digital has limited the number of networks
with critical mass, thus triggering an
escalation in transaction prices for cable
programmers to record levels.
15. On September 11, 1997, BET Holdings
announced that it had received an offer from defendant
Johnson and Liberty Media to acquire the remaining
shares of BET Class A stock that they do not already
own for $48 per share (the "Buyout Transaction").
16. That same day, the investment banking
firm of Lintz Glover White & Co. issued a "strong buy"
on the Company's Class A stock with a twelve month
price target of $63 per share.
17. Because the Buyout Group has an
overwhelming controlling interest in the Company's
common stock, no third party will likely bid for BET
Holdings. Moreover, none of the directors of BET
Holdings, all of whom are members of, affiliated with
or beholden to the Buyout Group, can meaningfully
consider the Buyout Transaction or engage in the
equivalent of arm's-length bargaining with the Buyout
Group. The Buyout Group will be able to proceed with
the Buyout Transaction without an auction or other type
of market check to maximize value for BET Holdings's
public shareholders. Moreover, by virtue of its
control and domination of BET Holdings, The Buyout
Group has unique knowledge of the Company and has
access to information denied or unavailable to the
public.
18. The Buyout Group timed the announcement
of the Buyout Transaction to place an artificial lid or
cap on the market price for BET Holdings' Class A stock
to enable them to acquire the minority stock at the
lowest possible price.
19. In view of the Buyout Group's control of
BET Holdings, it is unfair and in violation of
defendants' fiduciary duties to consummate the Buyout
Transaction without first obtaining a recommendation
and input by a truly independent representative of the
public stockholders or obtaining the majority approval
of the public stockholders.
20. By virtue of the acts and conduct
alleged herein, the defendants are carrying out a
preconceived plan whereby the Buyout Group will acquire
the minority public shares of BET Holdings for a price
that is grossly inadequate and intrinsically unfair to
BET Holdings public shareholders, is substantially
below true value and is a product of defendants'
conflicts of interest. As a result, the public
stockholders of BET Holdings will be wrongfully
deprived of their valuable investment in the Company
and all of its present and continuing profitability and
will receive, in return for their investment, grossly
inadequate consideration.
21. Unless enjoined by this Court,
defendants will continue to breach their fiduciary
duties owed to plaintiff and the other members of the
Class, and will succeed in consummating an unfair
transaction by virtue of the unfair dealing complained
of herein, all to the irreparable harm of the Class.
22. Plaintiff and the other members of the
Class have no adequate remedy at law.
WHEREFORE, plaintiff demands judgment and
relief in its favor and in favor of the Class and
against defendants, as follows:
A. Declaring that this action be certified
as a proper class action and certifying plaintiff as a
class representative;
B. Preliminarily and permanently enjoining
defendants and their counsel, agents, employees and all
persons acting under, in concert with, or for them,
from proceeding with, consummating or closing the
proposed transaction which will irreparably harm
plaintiff and the Class;
C. In the event the acquisition proposal is
consummated, rescinding it and setting it aside and/or
granting rescissory damages;
D. Awarding compensatory damages in an
amount to be determined upon the proof submitted to the
Court.
E. Awarding plaintiff the costs and
disbursements of this action including reasonable
counsel fees;
F. Awarding such other and further relief
which the Court may deem just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:________________________________
Joseph Rosenthal
1401 Mellon Bank Center
919 Market Street
Wilmington, DE 19801
(302) 656-4433
OF COUNSEL:
BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP
Vincent R. Cappucci
1285 Avenue of the Americas
New York, New York 10019
(212) 554-1400
EXHIBIT 99.3(d)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-----------------------------------x
:
ALAN FRIEDMAN, :
:
Plaintiff, :
: Civil Action No.
- against - :
: CLASS ACTION COMPLAINT
ROBERT L. JOHNSON, JOHN C. MALONE, : 15924 NC
DENZEL WASHINGTON, DELANO E. :
LEWIS, SHELIA CRUMP JOHNSON, BET :
HOLDINGS, INC., and LIBERTY MEDIA :
CORPORATION, :
:
Defendants. :
:
-----------------------------------x
Plaintiff, by his attorneys, Rosenthal,
Monhait, Gross & Goddess, P.A., for his complaint
against defendants, alleges upon information and
belief, except for paragraph 2 hereof, which is alleged
upon knowledge, as follows:
1. Plaintiff brings this action pursuant to
Rule 23 of the Rules of the Court of Chancery on his
behalf and as a class action on behalf of all persons,
other than defendants and those in privity with them,
who own the common stock of BET Holdings, Inc., ("BET"
or the "Company").
2. Plaintiff has been the owner of the
common stock of the Company since prior to the
transaction herein complained of and continuously to
date.
3. BET is a corporation duly organized and
existing under the laws of the State of Delaware. The
Company is a holding company with subsidiaries that
operate a cable television network which offers Black
oriented programming, publish general lifestyle
magazines aimed at Black American teenagers and
participates in joint ventures that produce and
distribute, independent feature films, mini-series and
situation comedies.
4. Defendant Liberty Media Corporation
("Liberty") is the record owner of approximately 18.1
percent of the Company's outstanding common stock and
26.3 percent of the Company's outstanding voting
shares.
5. Defendant Robert L. Johnson ("Johnson")
is the Chairman and Chief Executive officer of BET and
currently owns or controls approximately 21.8 percent
of the Company's outstanding common shares and 65.7
percent of the Company's voting shares.
6. Defendants John C. Malone, Denzel
Washington, Delano E. Lewis, and Sheila Crump Johnson
are the Directors of BET and are selected by Liberty
and Johnson.
7. The individual defendants and Liberty by
reason of their corporate directorships, executive
positions and voting power, respectively, stand in a
fiduciary position relative to the Company's public
shareholders and owe the public shareholders of BET the
highest duties of good faith, fair dealing, due care,
loyalty, and candid disclosure.
CLASS ACTION ALLEGATIONS
8. Plaintiff brings this action on his own
behalf and as a class action, pursuant to Rule 23 of
the Rules of the Court of Chancery, on behalf of all
security holders of the Company (except the defendants
herein and any person, firm, trust, corporation, or
other entity related to or affiliated with any of the
defendants) and their successors in interest, who are
or will be threatened with injury arising from
defendants' actions as more fully described herein.
9. This action is properly maintainable as
a class action because:
(a) The class is so numerous that
joinder of all members is impracticable. As of June 9,
1997, there were approximately 10,013,755 shares of BET
common stock outstanding, of which approximately 71.4
percent are owned by holders other than defendants
Liberty and Johnson and/or directors and officers of
the Company.
10. There are questions of law and fact
which are common to the class including, inter alia,
the following: (a) whether defendants have breached
their fiduciary and other common law duties owed by
them to plaintiff and the members of the class; (b)
whether defendants are pursuing a scheme and course of
business designed to eliminate the public securities
holders of BET in violation of the laws of the State of
Delaware in order to enrich Liberty and Johnson at the
expense and to the detriment of the plaintiff and the
other public stockholders who are members of the class;
(c) whether the said proposed acquisition, hereinafter
described, constitutes a breach of the duty of fair
dealing with respect to the plaintiff and the other
members of the class; and (d) whether the class is
entitled to injunctive relief or damages as a result of
the wrongful conduct committed by defendants.
11. Plaintiff is committed to prosecuting
this action and has retained competent counsel
experienced in litigation of this nature. The claims
of the plaintiff are typical of the claims of other
members of the class and plaintiff has the same
interests as the other members of the class. Plaintiff
will fairly and adequately represent the class.
12. Defendants have acted in a manner which
affects plaintiff and all members of the class, thereby
making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the
class as a whole.
13. The prosecution of separate actions by
individual members of the Class would create a risk of
inconsistent or varying adjudications with respect to
individual members of the Class, which would establish
incompatible standards of conduct for defendants, or
adjudications with respect to individual members of the
Class which would, as a practical matter, be
dispositive of the interests of other members or
substantially impair or impede their ability to protect
their interests.
SUBSTANTIVE ALLEGATIONS
14. On September 11, 1997, Liberty and
Johnson announced that they had offered to purchase all
of the outstanding common shares of BET which they did
not already own for $48.00 per share in cash.
15. The price of $48.00 per share to be paid
to the class members is unfair and inadequate because,
among other things: (a) the intrinsic value of the
stock of BET is materially in excess of $48.00 per
share, giving due consideration to the possibilities of
growth and profitability of BET in light of its
business, earnings and earnings power, present and
future; and (b) the $48.00 per share price is not the
result of arm's length negotiations but has been fixed
arbitrarily by Liberty and Johnson to "cap" the market
price of BET's stock, as part of a plan for Liberty and
Johnson to obtain complete ownership of BET's assets
and business at the lowest possible price.
16. The proposed bid serves no legitimate
business purpose of BET but rather is an attempt by
defendants to unfairly benefit Liberty and Johnson from
the transaction at the expense of BET's public
stockholders. The proposed plan will, for a grossly
inadequate consideration, deny plaintiff and the other
members of the class their right to share
proportionately in the future success of BET and its
valuable assets, while permitting Liberty and Johnson
to reap huge benefits from the transaction.
17. By reason of the foregoing acts,
practices and course of conduct, Liberty and Johnson
have breached and continue to breach their duties as
controlling stockholders of BET, and the individual
defendants have breached and will continue to breach
their duties as directors of BET and are engaging in
improper overreaching in attempting to carry out the
proposed transaction.
18. Plaintiff and the class have suffered
and will suffer irreparable damage unless defendants
are enjoined from breaching their fiduciary duties and
from carrying out the aforesaid plan and scheme. 16.
Plaintiff and the other members of the class have no
adequate remedy at law.
WHEREFORE, plaintiff demands judgment against
the defendants jointly and severally, as follows:
(1) declaring this action to be a class
action and certifying plaintiff as class
representative;
(2) enjoining, preliminarily and
permanently, Liberty and Johnson's offer for
acquisition of the BET stock owned by plaintiff and the
other members of the class under the terms presently
proposed;
(3) to the extent, if any, that the
transaction or transactions complained of are
consummated prior to the entry of this Court's final
judgment, rescinding such transaction or transactions,
or granting, inter alia, rescissory damages;
(4) directing that defendants pay to
plaintiff and the other members of the class all
damages caused to them and account for all profits and
any special benefits obtained as a result of their
unlawful conduct;
(5) awarding the plaintiff the costs and
disbursements of this action, including a reasonable
allowance for the fees and expenses of plaintiff's
attorneys and experts, and
(6) granting plaintiff and the other members
of the class such other and further relief as may be
just and proper.
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
By:________________________________
P.O. Box 1070
919 N. Market Street
Suite 1401
Mellon Bank Center
Wilmington, Delaware 19801
(302) 656-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & LIFSHITZ
274 Madison Avenue
New York, NY 10016
(212) 779-1414
EXHIBIT 99.3(e)
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
-----------------------------------------x
JEROME RAMOS, on behalf of himself and :
all others similarly situated, :
: Civil Action No.
Plaintiff, : 15941NC
:
- against - : CLASS ACTION
: COMPLAINT
ROBERT L. JOHNSON, PETER R. BARTON, :
JOHN C. MALONE, DENZEL WASHINGTON, :
DELANO E. LEWIS, SHEILA CRUMP :
JOHNSON, HERBERT P. WILKINS, SR., BET :
HOLDINGS, INC. and LIBERTY MEDIA :
CORP., :
;
Defendants. :
-----------------------------------------x
Plaintiff, by and through his attorneys, alleges the
following upon information and belief, except as to paragraph 2
which is alleged upon personal knowledge:
The Parties
1. Plaintiff brings this action as a class action on
behalf of himself and all other stockholders of BET Holdings,
Inc. ("BET" or the "Company") who are similarly situated, to void
and enjoin defendants' efforts to deprive the Company's minority
shareholders of their equity interest in BET at a grossly unfair
and inadequate price and to usurp the benefits of the Company's
growth and future prospects for defendants' own benefit.
2. Plaintiff Jerome Ramos is and has at all relevant
times owned shares of BET Class A common stock.
3. Defendant Robert L. Johnson ("Johnson") is the
founder of Black Entertainment Television, Inc., the Company's
primary operating subsidiary. Johnson is and has been at all
relevant times Chairman and Chief Executive Officer of BET and,
from 1991 until March 1996, also served as BET's President.
Johnson is also a director of defendant Liberty Media.
4. By virtue of his position as Chairman, Chief
Executive Officer and a controlling shareholder of BET, Johnson
is in a fiduciary relationship with plaintiff and other public
stockholders of BET, and owes plaintiff and other members of the
Class (defined below) the highest obligations of good faith,
candor, loyalty and fair dealing.
5. As of October 28, 1996, Johnson owned approximately
2,224,475 shares, or 21.8%, of BET's outstanding Class A stock,
and 4,820,000 shares, or 100%, of BET's outstanding Class C
stock, giving him approximately 65.7% of the voting power of all
classes of BET stock.
6. Defendant Liberty Media is a subsidiary of
Tele-Communications, Inc. ("TCI"). Through its subsidiaries and
affiliates, Liberty Media operates cable television systems and
provides satellite delivered programming services to various
video distribution media. As of October 28, 1996, TCI was the
beneficial owner of approximately 1,831,600 shares, or 18.1% of
BET's Class A stock, and 1,831,600 shares, or 100%, of BET's
Class B stock, giving it 26.3% of the voting power of all classes
of BET stock. The record holder of TCI's shares is LMCBET, Inc.,
a wholly owned subsidiary of defendant Liberty Media.
7. Defendant Peter R. Barton ("Barton") is and has
been at all relevant times a director of BET. Barton is also
President and a director of defendant Liberty Media.
8. Defendant John C. Malone ("Malone") is and has been
at all relevant times a director of BET. Malone is also Chairman
and a director of defendant Liberty Media.
9. Defendant Sheila Crump Johnson is and has been at
all relevant times a director of BET. Sheila Crump Johnson is the
wife of defendant Johnson.
10. Defendants Herbert P. Wilkins, Sr. ("Wilkins"),
Denzel Washington ("Washington"), and Delano E. Lewis ("Lewis")
are and have been at all relevant times directors of BET.
11. Defendant BET is a Delaware corporation with its
principal executive offices located at One BET Plaza, 1900 W
Place, N.E., Washington, D.C.
12. BET owns and operates two principal business
segments--cable television programming and magazine publishing.
The Company's cable television programming operations are
conducted by its entertainment group which includes Black
Entertainment Television Network ("BET Cable Network"). Its
publishing operations are conducted through its publishing group
which publishes Emerge Magazine.
13. BET has three classes of common stock
outstanding - Class A, Class B and Class C.
14. Except as to the election of directors, and as
otherwise required by Delaware law, all three classes of stock
vote together as a single class, with Class A holders entitled to
one vote per share and holders of Class B and Class C stock
entitled to ten votes per share.
15. The individual defendants identified in 3, 7-10
above are hereinafter referred to as the "Individual Defendants."
16. As directors of BET, the Individual Defendants are
in a fiduciary relationship with plaintiff and the other public
stockholders of BET and owe to plaintiff and other members of the
class the highest obligations of good faith, fair dealing,
loyalty and full disclosure.
CLASS ACTION ALLEGATIONS
17. Plaintiff brings this action on behalf of himself
and as a class action, pursuant to Rule 23 of the Rules of the
Court of Chancery, on behalf of all public stockholders of BET,
and their successors in interest, who are or will be threatened
with injury arising from defendants' actions as more fully
described herein (the "Class"). Excluded from the Class are
defendants herein and any person, firm, trust, corporation, or
other entity related to or affiliated with any of the defendants.
18. This action is properly maintainable as a class
action.
19. The Class is so numerous that joinder of all
members is impracticable. As of October 28, 1996, there were
approximately 10.1 million shares of BET Class A common stock and
outstanding, collectively held by more than 610 stockholders of
record. BET's shares are actively traded on the New York Stock
Exchange. Members of the Class are scattered throughout the
United States.
20. There are questions of law and fact which are
common to the Class and which predominate over questions
affecting any individual Class member.
21. A class action is superior to other methods for
the fair and efficient adjudication of the claims herein asserted
and no unusual difficulties are likely to be encountered in the
management of this class action. The likelihood of individual
class members prosecuting separate claims is remote.
22. Plaintiff is committed to the prosecution of this
action and has retained competent counsel experienced in
litigation of this nature. Plaintiff's claims are typical of the
claims of other members of the Class and plaintiff has the same
interests as the other members of the Class. Accordingly,
plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
23. Plaintiff does not anticipate any difficulty in
the management of this litigation as a class action.
BACKGROUND AND CLAIM FOR RELIEF
24. On or about September 11,1997, BET announced that
it had received an offer from its founder, Chairman and Chief
Executive Officer, defendant Johnson and defendant Liberty Media.
Pursuant to the terms of the proposal, Johnson and Liberty Media
would purchase all of the remaining shares of BET common stock
they do not already own at a price of $48 per share (the
"Proposal").
25. Currently, Johnson and Liberty Media collectively
control more than a majority of BET's outstanding voting power
26. As stated above, defendant Johnson currently owns
approximately 2,224,475 Class A common shares, and 4,820,000 or
100% of BET's outstanding Class C common stock representing 21.8%
of the Company's total outstanding common stock and holding
roughly 65.7% of the voting power of the Company.
27. As stated above, defendant Liberty Media currently
owns approximately 1,831,600 Class A common shares, representing
18.1% of the Company's total outstanding common stock and
1,831,600 shares or 100% of BET's Class B common stock, and
holding roughly 26.3% of the voting power of the Company.
28. Johnson and Liberty Media's Proposal is timed to
take advantage of the Company's new-found financial success. On
June 11, 1997, BET reported earnings per share of $.36 for the
third quarter of its fiscal year ended July 31, 1996, an increase
of 20 percent. For the nine months ended April 30, 1997, earnings
per share were $1.09, compared with earnings per share of $.89
for the nine months ended April 20, 1996, an increase of 22
percent. Commenting on the quarterly results, defendant Johnson
stated:
We are pleased with the outstanding operating
results reported by our core business the BET
Cable Network. During the quarter, BET
continued to prove its compelling appeal as
it attracted 2.2 million new subscribers,
including subscribers to Direct TV, which
ensures BET's financial success continues to
provide us with the means necessary to pursue
our strategy of expanding our cable
programming presence and pursuing brand
extension opportunities in businesses that
are compatible with our primary business of
providing entertainment, merchandise, and
leisure time activities to the black consumer
marketplace. During the past quarter we
achieved a number of successes as we executed
this strategy. As BET on Jazz celebrated its
first anniversary, it extended its presence
overseas as it opened a European sales office
in connection with its pursuit of
international subscribership. In February
1997, together with our partner Encore Media
Corporation, we launched our fourth cable
channel, BET Movies/Starz!3, a mini-pay
channel featuring black film artists. BET
Soundstage, our entertainment-themed
restaurant that we opened in January 1997,
continued to enjoy favorable reviews and
overwhelming patronage. Based in part on the
success of this restaurant, we recently
entered into an agreement with Walt Disney
World to open a BET Soundstage Club at
Pleasure Island, marking the first of several
planned expansions of the BET Soundstage
concept. While the start-up costs associated
with pursuing our growth strategy moderate
current earnings, we continue to remain
confident that these investments position the
company for future earnings growth and
increased shareholder value.
29. The Company's improving financial results have not
yet been fully reflected in the trading price of BET's stock.
Defendants Johnson and Liberty Media have thus breached their
fiduciary duties by failing to offer a fair price for the
Company's shares.
30. According to a September 12, 1997 article in The
Wall Street Journal, defendant Johnson believes the Company is
undervalued by Wall Street and he hopes to increase future
returns for himself and TCI by eliminating public stockholders.
31. On or about September 16, 1997, BET announced that
its Board of Directors had appointed a one-member committee
consisting of defendant Lewis to evaluate the proposal.
32. Defendants Johnson and Liberty Media, who control
over 50% of the vote, as a practical matter, could effectively
force the Company to accept this grossly inadequate offer even in
the face of opposition by the Company's public stockholders.
Thus, a vote of the majority of the minority stockholders is
crucial to shareholder democracy.
33. Although an independent committee has been formed,
it constitutes a sham; defendant Lewis has been handpicked by
Johnson and Liberty Media and has been assured that Johnson will
maintain the status quo.
34. The Individual Defendants suffer from disabling
conflicts of interest in that their desire to remain entrenched
in their positions at BET are in conflict with their obligation
to maximize shareholder value.
35. Defendants' fiduciary obligations require them to:
(a) undertake an appropriate evaluation of anv
bona fide offers, and take appropriate steps to solicit all
potential bids for the Company or its assets, consider strategic
alternatives and otherwise maximize shareholder value;
(b) act independently, including appointing a
disinterested committee and requiring a vote of a majority of the
minority stockholders so that the interests of BET's public
stockholders are protected; and
(c) adequately ensure that no conflicts of
interest exist between defendants' own interests and their
fiduciary obligations to the public stockholders of BET.
36. By virtue of the acts and conduct alleged herein,
defendants Johnson and Liberty Media and the remaining Individual
Defendants, are not complying with their fiduciary duties and are
carrying out a preconceived plan and scheme to entrench
themselves in office and to protect and advance their personal
interests at the expense of BET.
37. As a result of the foregoing, the Individual
Defendants have breached and/or aided and abetted breaches of
fiduciary duties owed to BET and its stockholders.
38. Unless enjoined by this Court, defendants will
breach their fiduciary duties owed to plaintiff and the other
members of the Class and may benefit themselves in their
corporate offices, all to the irreparable harm of the Class, as
aforesaid.
39. Plaintiff and the other members of the Class have
no adequate remedy at law.
WHEREFORE, plaintiff demands judgment as follows:
(a) declaring this to be a proper class action;
(b) ordering the Individual Defendants to carry out
their fiduciary duties to plaintiff and the other members of the
Class;
(c) ordering defendants, jointly and severally, to
account to plaintiff and the other members of the Class for all
damages suffered and to be suffered by them as a result of the
acts and transactions alleged herein;
(d) declaring that the Individual Defendants and each
of them have violated their fiduciary duties to the Class and/or
aided and abetted such breach;
(e) awarding plaintiff the costs and disbursements of
the action, including a reasonable allowance for plaintiff's
attorney's fees and experts' fees; and
(f) granting such other and further relief as this
Court may deem to be just and proper.
Dated: September 17, 1997
ROSENTHAL, MONHAIT, GROSS
& GODDESS, P.A.
BY:______________________________
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, Delaware 19899
Telephone: (302) 656-4433
Facsimile: (302) 658-7567
Attorneys for Plaintiff
Of Counsel:
GOODKIND LABATON RUDOFF
& SUCHAROW LLP
100 Park Avenue
New York, NY 10017
Telephone: (212) 907-0700
Facsimile: (212) 818-0477
HANZMAN CRIDEN KORGE
& CHAYKIN, P.A.
First Union Financial Center
Suite 2100
200 South Biscayne Boulevard
Miami, Florida 33131
Telephone: (305) 579-1222
Facsimile: (305) 579-1229
