Lorimar Makes a Bid to Stay on Fast Track

For sheer audacity, it was a move worthy of J. R. Ewing, the fictional wheeler-dealer in Lorimar’s hit series “Dallas.”

Earlier this month, Lorimar offered a cool billion dollars for Multimedia Inc., a Charleston, S.C., newspaper and broadcasting concern whose 1984 earnings were about triple those of Lorimar’s in fiscal 1984.

And, as if emulating the big-bluff tactics of J. R., Lorimar--whose cash reserves total just $87.7 million--announced the offer even before its investment banker had lined up financing for the deal.

Multimedia, so far, has reacted coolly to Lorimar’s bid, but Lorimar isn’t counting itself out. “This is not game-playing time,” said Merv Adelson, Lorimar’s controversial 55-year-old chairman, in a brief telephone interview.

“We’re extremely interested in expanding,” Adelson continued. “We think Multimedia would be an extraordinary fit.”

The acquisition would more than double Lorimar’s revenues, which totaled $263.2 million in the fiscal year ended July 28, 1984. But then, Lorimar, founded 16 years ago by Adelson and two partners, is no stranger to the fast track.

Fueled by such successful television series as “The Waltons,” “Eight is Enough,” “Knots Landing,” “Falcon Crest” and “Dallas,” Lorimar has emerged as one of the most powerful purveyors of programming in the medium’s history. The company expects to gross between $100 million and $120 million from the syndication of “Dallas” reruns alone.

“That’s a lot of money, considering that everybody already knows who shot J. R.,” notes Lee Isgur, first vice president and entertainment analyst in New York for PaineWebber Inc.

Analysts say syndication revenues from “Dallas” and Lorimar’s other vintage series should keep Lorimar’s profits booming for the next several years; in the six months ended Jan. 27, Lorimar’s net income rose 175% to $23.4 million.

But despite the bright profit outlook, the hard fact remains that Lorimar hasn’t produced a a single successful new television series since “Falcon Crest” made its debut in 1981.

“Berringer’s,” a glamorous one-hour drama set in a high-fashion department store, was recently dropped by NBC after getting dismal ratings during its 13-week run. “Detective in the House,” a new dramatic comedy on CBS, ranked 53rd out of 69 programs in last week’s Nielsen ratings.

So Lorimar is banking on acquisitions both for growth and to smooth out earnings from the volatile television industry. Profits from Lorimar’s past television successes have allowed the company to acquire an advertising agency (Kenyon & Eckhart), a home-videotape producer (Karl Video) and several film libraries.

Lorimar is also perennially trying to duplicate its television triumphs in theatrical motion pictures, where success has proven elusive. Most recently, it hired Craig Baumgarten to oversee movie production after he left as executive vice president of Columbia Pictures last fall.

No Blockbuster Films

The company has yet to come up with a blockbuster, though officials have high hopes for their $12-million political thriller “Power” starring Richard Gere, Julie Christie and Gene Hackman, and scheduled to be released in late 1985 or early 1986.

Lorimar’s creative chief is president and co-founder Lee Rich, an excitable former Benton & Bowles advertising man with a knack for discerning the public’s tastes. Noted for such comments as “I know more about the broadcast business than anybody,” Rich has been nicknamed “The Mouth That Roared” by some in the industry.

By most accounts, Rich is a super salesman, shmoozing with and cajoling network executives until he gets what he wants. Last year, he won a rich package from CBS that renewed “Dallas” for three years and “Knots Landing” and “Falcon Crest” for two.

(Rich’s exact age is something of a mystery. Several documents filed by Lorimar with the Securities and Exchange Commission last year listed it as 64. A 1983 proxy statement listed it as 63. But a Lorimar spokesman who claims to have seen Rich’s passport says that those were mistakes and that Rich is 62. People magazine and Newsweek interviewed Rich in 1981 and 1980, respectively, and both called him 55.)

(When the discrepancies were brought to the attention of vice president and director of investor relations Carol J. Henry, she said: “I’d go with the age in the proxy statement”--which would make Rich 64 or 65. Lorimar has no mandatory retirement age.)

Low Opinion of Viewers

What is clear about Rich is his opinion of the typical television viewer. “Don’t make the American public something it’s not,” he said in a 1981 interview published in American Film magazine. “You can’t talk about sophistication when you’re talking about the American public. You can’t give them relevance that hurts.

“I don’t have to apologize for anything I’ve done,” Rich added. “Dallas may be crap--and it won’t win any awards--but it’s really good crap.” (Along with most of Lorimar’s executives, Rich declined to be interviewed for this article. Adelson granted a brief interview in connection with the Multimedia offer.)

“The combination of Lee Rich and Merv Adelson has been extremely rewarding,” says Jack Ackerman of Drexel Burnham Lambert, Lorimar’s investment banker. Adelson, a former real estate developer, “has a solid business background, so Lee and the creative guys don’t have to get involved with day-to-day business operations,” Ackerman says. “This has allowed the entertainment side to flourish.”

Adelson’s business background has sometimes brought him unwanted attention. He and Lorimar’s third co-founder, Irwin Molasky, are long-time business associates of admitted Prohibition-era bootlegger and illegal gambling-house operator Morris B. (Moe) Dalitz.

Partners in La Costa

Adelson, Molasky, Dalitz and convicted stock manipulator Allard Roen were partners in the 1962 construction of the posh Rancho La Costa resort in northern San Diego County. Molasky, a Lorimar vice president, also currently serves as vice president of La Costa.

In 1982, La Costa, Adelson and Molasky lost a libel suit they brought against Penthouse after the magazine ran an article linking the Teamsters pension fund-financed resort to organized crime. Subsequently, the trial judge granted Adelson and Molasky a new trial, which is still pending.

Adelson’s and Molasky’s ties to Dalitz and Roen also emerged as an issue during the 1973 Los Angeles mayoral campaign. As a result, then-candidate Tom Bradley returned $52,000 in campaign funding from Adelson and Molasky after Lorimar’s founders were attacked by Bradley’s political opponents.

In his brief interview with The Times, Adelson said he doesn’t believe that his association with Dalitz and Roen would hurt Lorimar’s chances of winning Multimedia’s television licenses if Lorimar’s bid for the company succeeds. “My background is very above board,” he said. “I have nothing to hide, nothing to be ashamed of.”

Rich’s background in advertising has served the company well. He is credited with devising the strategy that saved “The Waltons” after its 1972 debut to poor ratings.

Rich’s solution: newspaper and magazine ads that, in effect, taunted viewers into watching the critically acclaimed show. “This program is so beautiful, it has to die,” the ads read.

Liked What They Saw

Television watchers tuned in and liked what they saw; “The Walton’s,” Lorimar’s first television series, zoomed up to the No. 2 spot in the following year’s Nielsen ratings.

But if the homespun family drama of “The Waltons” launched Lorimar, it was the pioneering prime-time soap opera “Dallas” in 1978 that firmly established the company’s reputation and led to its later triumphs with the “Knots Landing” spinoff and with “Falcon Crest.”

“Lorimar recognized the public’s appetite for glamour very early on,” analyst Isgur says. “They did a very classy product and it paid off.” “Dallas” made television history with a 76% audience share on Nov. 21, 1980, when 120 million Americans tuned in to find out who shot J. R. (It was his mistress, Kristen.)

Lorimar again broke new ground last year when it syndicated its “Dallas” reruns. Broadcasters had questioned whether viewers would want a daily hour-long dose of the intricately plotted continuing drama.

To drum up interest in the show, Lorimar put together a “traveling museum” featuring such artifacts as the gun that shot J. R., an oil painting of family patriarch Jock Ewing, and Sue Ellen’s wedding gown.

Despite the hype, “it was a very tough sell,” says the programming director of one independent television station in California. Program buyers in many markets shunned the show; in others, Lorimar had to settle for less-desirable UHF stations.

As a result, “Dallas” ranked 49th among all syndicated shows in Nielsen’s most recent national ranking of syndicated shows and was available to just 57% of the nation’s households. By contrast, “MASH” was available to 88% of the nation’s households and “Wheel of Fortune,” the No. 1 syndicated show, covered 98% of the nation.

Outperformed Other Shows

Still, “Dallas” reruns have generally outperformed the shows they replaced, and that bodes well for future syndication sales of “Knots Landing” and “Falcon Crest.” Demand for syndicated programming has risen sharply in recent years because of the dramatic growth in the number of independent television stations.

“Domestic syndication provides by far the most lucrative manner in which to maximize profits on a television program,” according to Value Line Inc., a New York investment-advisory service.

“In fact,” Value Line adds, “since production of network shows is usually only a break-even proposition, the ultimate goal of television producers like Lorimar is to turn out sufficiently long-lived series to make syndication possible.”

That could mean trouble a few years down the line if new hit series continue to elude Lorimar. Characteristically, Lorimar’s always-upbeat management shrugs off such worries, and Wall Street apparently agrees; the company’s stock has tripled since it went public in 1981.

With “Dallas,” “Knot’s Landing” and “Falcon Crest,” “we have three of the 10 top-rated series,” says director of investor relations Carol Henry.

Lorimar, she notes, is also well-positioned to exploit the fast-growing home-video market with its Karl Video unit, producer of the popular “Jane Fonda’s Workout” tapes.

“So when people say, ‘what have you done lately?”’ Henry says, “all I can do is laugh.”