Lorimar May Purchase Its 2nd Ad Agency : Analysts Speculate Firm to Buy Bozell & Jacobs
Lorimar said Tuesday that it will make an announcement here this morning, prompting widespread speculation that the entertainment firm will disclose its acquisition of Bozell & Jacobs, an advertising agency.
Officials of Culver City-based Lorimar, producer of the television series “Dallas,” “The Waltons” and “Falcon Crest,” have acknowledged their interest in purchasing a second advertising agency. Lorimar paid $20.9 million to purchase the Kenyon & Eckhardt agency in 1983.
Negotiations with Bozell & Jacobs have been held intermittently since last fall, industry analysts and other sources said. Lorimar officials declined comment except to say that an announcement is scheduled for this morning. Executives of Bozell & Jacobs did not return a reporter’s telephone calls.
According to the Standard Directory of Advertising Agencies, Bozell & Jacobs is the 17th-largest advertising agency with $675 million in annual billings. A March survey by Advertising Age magazine said that the agency has 1,650 employees and that its gross income grew 27% between 1983 and 1984 to $94.2 million.
Analysts say such a purchase would signal that Lorimar has decided to expand in a familiar field rather than join in the superheated bidding for broadcast properties.
Last April, Lorimar bid $1 billion for Multimedia Inc., a newspaper and broadcasting concern, but was outbid for the company by businessman Jack Kent Cooke. Both the Cooke and Lorimar bids have been rejected.
Lee Rich, Lorimar president and co-founder, is a former advertising executive.
Jeffrey B. Logsdon, an industry analyst at the Los Angeles securities firm of Crowell, Weedon, said an acquisition of Bozell & Jacobs would enable Lorimar to take full advantage of the growth of broadcast barter, a practice in which production firms are paid in part for programming with a portion of the advertising time allotted for their shows.
Revenue From Advertising
Logsdon noted that Lorimar’s acquisition plans were signaled last fall when the company sold convertible debentures to raise $115 million. In his view, Lorimar would do far better to purchase an agency than to try to swallow Multimedia. Lorimar’s bid for that property “was a little ambitious,” he said.
With the purchase of Bozell & Jacobs, advertising would account for about half of Lorimar’s revenue, Logsdon said.
Analysts speculated that the advertising agency could sell for between $50 million and $75 million. Lorimar’s cash reserves total about $88 million.
The company has been expected to diversify to limit its exposure in the volatile television business. Its revenue grew 43% last year to $263 million while earnings grew 33% to $11.6 million.
But Lorimar has not had a successful new television program since “Falcon Crest” was introduced in 1981.