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Milken Earns a Reported $50 Million in Turner Deal : Consulting: The fee raises question of whether he violated terms of his sentence barring him from giving investment advice.
LAT ARCHIVES
SEP. 30, 1995 12 AM PT
FROM ASSOCIATED PRESS
Nearly three years after he finished serving a prison sentence for violating securities laws, Michael Milken stands to reap a reported $50 million from helping to advise Ted Turner in his negotiations to sell Turner Broadcasting System Inc. to Time Warner Inc. for $7.5 billion.
The huge sum shows that Milken, one of the most influential financiers of the 1980s, hasn’t lost his touch even though he has paid $1.1 billion in fines and legal settlements and spent two years in prison.
He also gave advice on MCI Communications Corp.'s investment in News Corp., although the size of his fee wasn’t known.
Details of Milken’s latest deal making, reported Friday in the Wall Street Journal, raised the eyebrows of federal securities regulators. The Securities and Exchange Commission had barred the former Drexel Burnham Lambert bond executive from securities dealings and investment advice as part of his historic settlement with the government in 1990.
His compensation, contingent on completion of the Time Warner-Turner merger, opens the question of whether Milken acted as an investment adviser in violation of his SEC sanctions.
A Milken spokesman, Kam Kuwata, acknowledged a fee would be paid to Milken but would not specify the amount, saying it was still in discussion. He insisted Milken was solely a business consultant to the companies, didn’t negotiate the transaction and wasn’t at meetings attended by other advisers.
“He is a consultant to Turner on the long-range planning needs of Turner Broadcasting,” Kuwata said.
Still, Milken’s role in the Time Warner-Turner deal wasn’t clear. Kuwata declined to say exactly what Milken did. Spokesmen for the companies would not comment.
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According to the Journal, a fifth of Milken’s fee, or $10 million, will come from counseling Turner Chairman Ted Turner, who will pay the cost from his own pocket. The remainder will be picked up by Turner Broadcasting.
Turner initially proposed paying Milken $100 million, but that idea was squelched by Turner board member John Malone, chairman of Tele-Communications Inc., the Journal said. TCI is the nation’s biggest cable system operator and owns 21% of Turner.
A TCI spokeswoman declined to comment and said Malone was not available.
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