SFOG Investors Win Law Suit
Robert Ulrich
Saturday, December 19, 1998
INVESTORS WIN CASE VS. SIX FLAGS CHAIN
By Charles Haddad and Henry Farber, Staff Writers
A state court jury in Gwinnett County issued the largest award in
state history Friday, ordering Time Warner and other former owners of
the Six Flags Theme Parks chain to pay $197 million in compensatory
damages to investors in the chain's Atlanta park.
The award could go even higher on Monday, when the court is scheduled
to begin considering punitive damages. The case involves a group of
Six Flags Over Georgia investors that had sued Time Warner, accusing
it of mismanaging the Atlanta park. The trial began Nov. 16.
Friday's verdict promises to be only the first round of a long running
legal battle over the park, now owned by Premier Parks of Oklahoma
City.
Time Warner said it would appeal the verdict, issued in Superior
Court. Its president, Richard Parsons, said his company lost because
"we were wrongfully precluded from presenting certain important
evidence.
"We also believe that the jury would have reached a different result
had it been able to see all the facts."
Jim Butler, the well-known Columbus-based attorney who filed the suit,
declined comment on Friday. He was said to be awaiting the final
verdict.
Butler has won a number of other big civil verdicts in Georgia.
Before Friday's verdict, the biggest in Georgia was a $101 million
award in Fulton County Superior Court against General Motors in a
product liability case. The verdict was reversed in 1994.
Time Warner, which owns Atlanta-based Turner Broadcasting System Inc.,
is liable for about $95 million of the $197 million verdict. It held
a controlling interest in the partnership that had owned the Six Flags
chain, which has other amusement parks nationwide.
Other owners included a Boston-based investor group and other
investors. It is some of the other investors in Six Flags Over
Georgia, scattered nationwide, who sued Time Warner over management of
the park.
The suit, seeking $250 million in damages, charged Time Warner put off
the installation of key rides that would have attracted park visitors.
It also accused the company of reselling old rides at inflated prices
to the Atlanta park.
For example, the suit said a ride called "The Viper" was in "poor
condition and virtually obsolete" when installed, having seen service
in another Six Flags park. It also charged that the ride was
overpriced, worth $760,000 new but sold to Six Flags Over Georgia for
$1.3 million.
Time Warner and its partners sold the Six Flags chain in February for
$1.9 billion in stock, cash and debt. The new owner, Premier Parks,
already operates other amusement parks.
Robert Ulrich
Monday bringing the total to $454 million in the dispute over running
the park, additn to what was already the largest civil award in
Georgia's history. The award is against Time Warner Entertainment -
3/4-owned by Time Warner, and three former theme park subsidiaries.
Time Warner Vice Chairman Ted Turner took the stand Monday. "The
whole thing surprises me and dissapoints me, what happened here,"
Turner said on the stand. "If we've done anything worng, I want to
apologize for it."
Investors in the Cobb County theme park sued Time Warner
Entertainment, whom they had contracted to manage the park, accusing
the company of delaying renovations and refusing to add popular rides
to the park.
The partnerships said Time Warner deliverately kept the Batman roller
coaster away from the facility and let maintenance fall $7 million
behind in an effort to renew the management contract at a lower rate.
"They did it for profit because their goal was to get the Georgia park
and to get it cheap," Columbus attorney Jim Butler, who represented
the partnerships, said in his closing argument.
Butler told the jury Ted Turner had little to do with the case -
Turner admitted he had been to the park only once or twice in his life
- and accused Time Warner lawyers of using his celebrity to try to
sway the jury.
Time Warner attorney Evan Chesler said after the five-week trial that
Turner's fame had nothing to do with his testimony. "He's the vice
chairman of the company," he said.
This morning it was reported that Time Warner will appeal the verdict.
Excerpted from The Atlanta Journal Constitution, Michael Weiss Staff
Writer, WXIA-TV, WSB-TV and other reports.
Robert Ulrich
ATLANTA, Dec 21 (Reuters) - A U.S. jury raised to $454 million on
Monday a verdict against affiliates of media giant Time Warner Inc.
(Nyse:TWX) in a case arising from a contract dispute at the Six Flags
Over Georgia theme park.
A jury in Gwinnett County, Georgia, had awarded $197 million in
compensatory damages on Friday to Six Flags Fund and the Six Flags
Over Georgia partnership. The jury decided on Monday that punitive
damages should also be imposed, adding $257 million and hiking the
total to $454 million, according to a statement from the plaintiffs'
lawyer.
Time Warner President Richard Parsons, who testified in the trial,
said the company would appeal both the verdict and the damages
awarded.
"Time Warner and TWE (affiliate Time Warner Entertainment) believe
that the jury's verdict is both unsupportable and unfounded," Parsons
said in a statement. "The verdict is contrary to the evidence. The
company was precluded from presenting important and relevant evidence.
We intend to vigorously appeal."
The case had pitted investors in the theme park, now owned and
operated by Premier Parks Inc. (Nyse:PKS) , against the Time Warner
affiliates that managed the park.
Time Warner is the world's largest media and entertainment
conglomerate. Premier Parks is the world's second-largest operator of
theme parks.
Plaintiffs' attorney James Butler said Time Warner deliberately
depressed the value of the park to force the investors to sign a new
contract. The investors also charged Time Warner's affiliates, which
included Time Warner Entertainment, with taking money from the
partnership without the knowledge or approval of its partners.
The verdict was the largest in Georgia's history, far surpassing the
$105 million General Motors was ordered to pay in 1993 to the
survivors of a car-crash victim. Butler also represented the
plaintiffs in that case.
More than 100 investors from around the country purchased the Six
Flags Over Georgia theme park from Great Southwest Corp in 1968,
entering into a limited partnership in which Great Southwest managed
the park.
Time Warner acquired a controlling interest in the park and other Six
Flags operations in 1991, and the investors claimed it pressured them
to sign a new contract. The investors said Time Warner planned all
along to reduce capital expenditures at the Georgia park, located just
west of Atlanta, especially for new rides that would draw new and
repeat visitors.
The investors also claimed that Time Warner sold partnership assets
and pocketed the money.
In 1995, Time Warner sold Six Flags stock to a group led by Boston
Ventures LP and to Premier Parks. The combined value of the two
transactions was $2.1 billion, Butler said.
Also testifying at the trial were Robert Pittman, former chief
executive officer of Time Warner Entertainment and current president
of America Online (Nyse:AOL) ; Warner Brothers CEO Robert Daly and
Time Warner Vice Chairman Ted Turner, the CNN chief who joined the
company two years ago when he sold his media and entertainment
holdings to it. Turner owns about $5.5 billion in Time Warner stock.