Oak Industries Sells Its ON-TV Service to SelecTV

After nearly two years of on-again, off-again negotiations, Oak Industries Inc. said Monday that it has sold its ailing ON-TV service in Los Angeles, once the largest over-the-air pay television operation in the country, to rival SelecTV of America Ltd.

The deal means that SelecTV, with about 59,000 subscribers in the Los Angeles area, will absorb the much larger ON-TV, with about 156,000 subscribers. SelecTV is a subsidiary of Clarion Co. Ltd., Japan’s largest independent manufacturer of stereo equipment.

SelecTV said it will continue to operate both services separately, and it said there will be no “immediate changes” in ON-TV’s programming, which includes sports events such as the Los Angeles Lakers and Kings games. SelecTV is an all-movie service.

Both services have suffered heavy subscriber losses recently as part of a general decline in the subscription-television market brought about by competition from cable television and low-cost videocassette movie rentals. In late 1981, when the subscription-TV business was at its peak, ON-TV had 380,000 subscribers in Los Angeles and SelecTV had 125,000 subscribers.

The purchase, effective last Friday, was made for an undisclosed amount of cash and the assumption by SelecTV of certain unspecified liabilities of ON-TV.

Robert J. Hartney, vice president-corporate relations for San Diego-based Oak Industries, said the company had no comment on a report in Daily Variety that the deal consists of SelecTV assuming $15 million in ON-TV liabilities and paying $3 million for ON’s subscriber list.

However, a high-ranking SelecTV source said the total figure is “considerably less” than $18 million.

Oak’s partner when ON-TV was founded in April, 1977, Hollywood entrepreneur Jerry Perenchio, sold Oak his 49% stake in the firm for $55 million in 1981.

Although some analysts have predicted that the two services will be forced to consolidate eventually in order to survive, SelecTV President and Chairman Jim LeVitus said: “I have no intention of changing (ON-TV’s service). I haven’t had a chance to sit down with Jerry Buss (owner of the Kings and Lakers, with whom ON-TV has a contract to broadcast games through the current season), but I’m going to.”

Not included in the deal is KBSC-Channel 52, the Oak-owned TV station in Corona from which ON-TV is aired. The station is for sale, but LeVitus said that, when it is sold, “we have a right to talk to the new owners and discuss buying time from them.”

The big savings from the consolidation of ON-TV and SelecTV, he said, comes from combining accounting and subscriber services on one computer system.

As part of the deal, SelecTV will retain 178 ON-TV employees, or most of the existing staff of 187. The remainder have already resigned, LeVitus said.

“Everybody is up,” he said. Despite the dwindling subscribers for subscription television in general, its days are not numbered, he added, “Or why would we buy ON? I’m not sure about growth, but some of the plans we have for the future indicate there’s plenty of room for us to grow in this market.”

With a combined subscriber list of 215,000, the deal makes SelecTV “by far” the largest subscription-television service in the country, LeVitus said.