Takes a ‘No-Sale’ Stand : Multimedia Rejects Lorimar Bid

Multimedia, a Greenville, S.C.-based company that has grown steadily by acquiring newspapers and broadcast outlets in areas with minimal competition, Thursday rejected a $1.02-billion acquisition bid from Culver City-based Lorimar, saying the company is not for sale.

Lorimar’s offer, at $61 a share, bested a recent $1-billion offer by Wesray, a company led by former Treasury Secretary William E. Simon, that also was rejected by Multimedia in favor of a management-sponsored plan to buy back most of its common stock.

Despite the rejection, a top official of Lorimar, which produces such network TV programs as “Dallas,” “Knot’s Landing” and “Falcon Crest” and owns the Kenyon & Eckhardt advertising agency, insisted that the offer might still succeed.

In a telephone interview, Lorimar Chairman Merv Adelson said he has had several “cordial” telephone conversations with Multimedia Chairman Wilson C. Wearn since presenting the offer Wednesday.

“I think that they are seriously considering our offer,” Adelson said. He said that Multimedia and Lorimar would make “an extraordinary fit,” adding that the acquisition would be “cash-flow positive” for the combined companies. He said he has asked to meet with Wearn in person to discuss the offer.

Noting that both companies were involved in syndicating television programs, Adelson said: “There are things we both do well. We can do them better together.”

Multimedia is the latest of a number of broadcast companies whose stock has attracted interest because they are viewed as potential takeover targets.

Lorimar presently owns no broadcast outlets or newspapers.

Despite Multimedia’s “no sale” stand, analysts say that the recent bidding will complicate management’s plans to buy back most of the company’s stock through a leveraged buy-out. (In such a buy-out, investors borrow against a company’s assets to purchase most or all of its stock.)

Last November, Multimedia announced plans to repurchase as many as 1.6 million common shares. The plan ran into trouble in February, when a group of stockholders filed a lawsuit charging that management’s offer--$37 in cash and a bond with a face value of $25 a share--was too low.

Earlier this month, Multimedia announced that its directors had approved a sweetened offer from the management-led investors group that includes the company’s top three executives and members of the Peace, Jolley, Sisk and Furman families, who founded Multimedia’s predecessor companies.

That offer was valued at $53.25 a share in cash and debentures.

Wesray’s $60-a-share bid was rejected by management and members of the founding families, who hold in excess of 40% of the outstanding shares.

Management and the founding families subsequently proposed a recapitalization plan under which each outstanding share would be swapped for $41.25 in cash and $26.54 worth of a new issue of 16% company debentures.

$54-Per-Share Offer

The aggregate current value of the offer was estimated at $54 per share.

Shareholders also were given the option to retain an equity interest in Multimedia by taking slightly less cash.

Donald J. Barhyte, vice chairman and chief financial officer of Multimedia, said that it is “unlikely” that the company will revise its capitalization proposal.

“There is no consideration of it at this time,” he said.

However, according to Barry Kaplan, an analyst for the New York brokerage firm of Bear, Stearns, “Even though they have the ability to fend off the (outside) offers, it’s difficult legally and politically to pay $54 a share when someone is willing to pay $61.”

The Lorimar bid will “put pressure on management to boost its offer,” Kaplan said.

In National Market System trading on the over-the-counter market Thursday, Multimedia shares closed at $54.50, up 50 cents.

Multimedia was formed in 1968 through the merger of Southeast Broadcasting Corp. and Asheville Citizen-Times Publishing Co. into Greenville News-Piedmont Co.

The company now owns daily and weekly newspapers located mostly in Southeast and mid-Atlantic states.

It also owns and operates 12 radio stations and five TV stations, including KSDK in St. Louis, an NBC-affiliated station acquired in a trade with Pulitzer Publishing Co. in 1983.

The company operates about 40 cable-TV franchises in four states and produces and syndicates television programming, including “The Phil Donahue Show.”

Earnings Drop

It has earned a reputation as a solidly profitable company that has purchased properties, normally in smaller cities, and enjoys reduced or no competition in its markets.

After a 10-year period of steady growth and profitability, however, Multimedia’s earnings dropped last year as a result of losses from Sports Time, a cable-TV joint venture with St. Louis-based Anheuser Busch Cos. and Telecommunications Inc.

That venture, now defunct, cost Multimedia about 45 cents per share last year, Kaplan estimates.

“That’s the only mistake of any consequence I can ever remember them making,” said Kaplan.

“Other than that, they’ve always done outstandingly well.”

MULTIMEDIA INC. AT A GLANCE Operations are concentrated in broadcasting (which accounts for nearly half of revenues), newspaper publishing, cable television and syndication of TV programs. Performance In millions of dollars, year ended Dec. 31

1984 1983 1982 1981 1980 Revenue $304.4 $262.7 $225.5 $195.3 $163.6 Net Profit 33.7 35.2 28.9 25.8 21.6

Daily Newspapers

Advertiser and Journal Montgomery Ala. News Chief Winter Haven, Fla. Observer Moultrie, Ga. Citizen and Times Asheville, N.C. Tribune Gallipolis, Ohio Sentinel Pomeroy-Middleport, Ohio News and Piedmont Greenville, S.C. Leaf-Chronicle Clarksville, Tenn. Register Pt. Pleasant, W. Va. Leader Staunton, Va.

(Company also publishes 26 non-dailes) Properties Television:

WMAZ Macon Ga. KSDK St. Louis WLWT Cincinnati WBIR Knoxville WZTV Nashville

AM Radio:

KAAY Little Rock WMAZ Macon, Ga. WAKY Louisville WWNC Asheville, N.C. WFBC Greenville, S.C. KEEL Shreveport, La.

FM Radio:

KLPQ Little Rock WMAZ Macon, Ga. WVEZ Louisville WFBC Greenville, S.C. WEZW Wauwatosa, Wis KMBQ Shreveport, La.

Operating Cable Systems:

Illinois 12 Kansas 16 North Carolina 3 Oklahoma 20