MGM/UA Isn’t Going Private, Holders Told

Chairman Frank Rothman of MGM/UA Entertainment Co. told its stockholders emphatically Saturday that there are “no plans of any kind” to transform the publicly traded movie studio into a privately owned entity.

Under questioning from the floor at the firm’s annual meeting at its Culver City studio, Rothman had to concede that he is not necessarily privy to all the intentions of controlling shareholder Kirk Kerkorian. Just a year ago, the financier withdrew an offer to buy out the public’s 50% holding in MGM/UA three weeks after he proposed it.

Kerkorian, who as usual did not attend the public session and was therefore unavailable for questioning, increased his holdings in the related casino firm, MGM Grand Hotels Inc., to 70% from 50% two months ago.

And less than a month ago, MGM/UA management proposed to buy back the 15% interest held by public shareholders in its subsidiary pay-television and home-video subsidiary, MGM/UA Home Entertainment Group Inc.

Stockholders noted from the floor that there has been Wall Street speculation that the proposal may be a prelude to other actions. One shareholder, Ted Berkowitz, suggested that one might be another “freeze-out” bid by Kerkorian for the whole company.

With MGM/UA’s stock price now near its all-time low of $11 a share, Kerkorian “would be getting a steal,” Berkowitz said.

“You are dead wrong,” Rothman replied. “There are no plans of any kind to take this company off the public marketplace. You are conjuring up a set of circumstances that are not real.”

Several stockholders made plaintive remarks about what one termed the MGM/UA stock’s “abysmal performance” in recent months. One woman, after listing to Rothman’s upbeat comments about the company’s condition and film release schedule, expressed concern about “the (stock) price going down when everything sounds so great.” Rothman said he believes no one really understands what makes the stock market behave as it does.

Another stockholder made a wry reference to a possible explanation in the firm’s recent profits, which were down 85% in the first quarter of fiscal 1985 following an 80% drop in the previous quarter, both compared to year-earlier levels.

In contrast to past stockholder sessions, there seemed to be more applause from the floor for critical remarks. More than one stockholder suggested the need for a younger viewpoint at the studio in selecting pictures to be produced.

Another criticism was directed against the hiring of Roman Polanski to direct “Pirates,” which will be distributed by MGM/UA. Polanski fled the United States seven years ago on the eve of his sentencing here on a plea of guilty to having unlawful sexual intercourse with a 13-year-old Woodland Hills girl. Rothman said the film was produced by Dino De Laurentiis and that the studio had no say in the matter.

One event that proved popular to the stockholders was the election of singing star Dinah Shore as the first woman ever to be on MGM’s board of directors. Other notables serving as directors are Cary Grant and Art Linkletter.

Rothman maintained a firmly optimistic attitude throughout the meeting and said fiscal 1984 was “a year of achievement, growth and planning for the future.” He reiterated the studio’s confidence in its recent and near-term box-office releases.

He even managed to smile when a reel broke during a showing of clips from these films to shareholders. The showing was completed after the meeting.