Davis Pulls Out of TV Station Deal : Murdoch to Proceed With Metromedia Purchase on His Own

Times Staff Writer

Oil and movie tycoon Marvin Davis disclosed late Friday that he has backed out of a deal to buy a 50% interest in six Metromedia television stations. Newspaper publisher Rupert Murdoch, who since April has been Davis' partner in 20th Century Fox, said he now will be the sole buyer in the $1.5-billion transaction.

Sources close to Murdoch indicated that he is "quite happy" at the prospect of going ahead with the purchase on his own. The six stations include KTTV-Channel 11 in Los Angeles and others in New York, Chicago, Washington, Houston and Dallas-Fort Worth.

Meanwhile, spokesman Howard J. Rubenstein said in New York that Murdoch sees "absolutely no problem" in handling all of the financing, which would require him to raise about $150 million in cash and assume existing loans for the remainder. It is "well within his financial capacity," Rubenstein said.

Rubenstein also said Murdoch will ask for up to two years to sell his New York and Chicago newspapers in his application to the Federal Communications Commission for permission to own the Metromedia stations. FCC rules prohibit common ownership of newspapers and TV stations in the same market. Murdoch is to file his license application Monday, Rubenstein said.

Won't Exercise Option

There was no immediate explanation from Davis or his representatives about why he decided not to participate in the deal.

Murdoch's spokesman said he learned of Davis' decision Friday afternoon, after Murdoch and Davis met in Los Angeles. Other sources expressed surprise on learning of the announcement.

What Davis actually decided, the joint announcement disclosed, was "not to exercise an option" to buy 50% of the new company that will own the television stations. The original announcement of the purchase had not used the word "option" in indicating that both Murdoch and Davis would buy the TV properties from Metromedia.

"We didn't announce originally the structure of the deal," Rubenstein said when asked about it Friday.

Davis was quoted in Friday's announcement as saying: "We will concentrate on the development of our other investments . . . and consider other investment opportunities. I look forward to continued association in partnership with Mr. Murdoch at Fox."

The announcement said Fox Chairman Barry Diller, whose role in the impending TV-station operation has been heralded as a major one, "will continue to be involved with the stations and Fox."

Diller could not be reached for comment, and Fox did not comment on the announcement, which originated with New York public relations representatives of Murdoch and Fox.

Rubenstein referred questions on Diller to Davis spokesman James Fingeroth, who said he thought the wording was intended to show that Diller's role was not changing as a result of Davis' decision not to participate in the TV deal.

Murdoch, an Australian citizen, has filed his application to become an American citizen to comply with another FCC rule that prohibits non-citizens from owning more than 20% of a TV license, Rubenstein said. He said Murdoch filed the application for U.S. citizenship in mid-May with the Immigration and Naturalization Service.

The spokesman said Murdoch would request "the standard temporary waiver for divestiture purposes" to give him "ample time" to sell the New York Post and Chicago Sun-Times newspapers to comply with the cross-ownership rules. Previously, Murdoch has declined to say if he planned to sell the two newspapers in connection with the television-station acquisition.

Murdoch bought the New York Post in December, 1976, and the Chicago Sun-Times in November, 1983. His sale of the Village Voice to businessman Leonard N. Stern for more than $55 million was announced Thursday. Murdoch bought the New York weekly publication in 1977.

He also owns the Boston Herald, New York magazine and, in England, the London Times.

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