MCA Stock Up Sharply on Talk of RCA Merger

The price of MCA shares rose sharply Wednesday on speculation that the Los Angeles-based entertainment giant may be considering a merger with RCA or some other business combination or reorganization.

Executives at both MCA and RCA declined to comment.

On the New York Stock Exchange, MCA rose $3.25 to close at $68. About 2.02 million shares were traded, making MCA the second most-active issue Wednesday and establishing a one-day record for volume in the company’s stock. MCA stock has risen $8.125 a share in the last three days of trading.

Meanwhile, RCA shares closed at $46.125, down 37.5 cents. Volume of 1.13 million shares made RCA the Big Board’s 10th most-active issue Wednesday.

Wall Street has expected RCA to search for a major acquisition since its announcement last month that it plans to sell its Hertz Corp. subsidiary for $587.5 million to UAL Inc., parent of United Airlines. As a leaner, cash-rich company, RCA might become a takeover target unless it moves swiftly to expand in one of its core businesses: electronics, communications or entertainment.

MCA, for its part, has a keen interest in expanding its interests in the entertainment industry, and it has a historically close relationship with NBC, RCA’s television network. The two companies worked together to pioneer the TV industry’s first hourlong filmed dramatic series and also the first multipart dramatization of a novel. Of the 14 series currently in production at MCA’s Universal Television unit for the upcoming season, six are for NBC.

In an interview last November, MCA Chairman Lew R. Wasserman told The Times that he was not opposed to “any merger that’s fair to all shareholders” and expressed the belief that, in the current regulatory environment, MCA might be allowed to merge with a television network or broadcasting company.

At the time, however, Wasserman played down a report that he had discussed the possibility of a merger with RCA after Thornton F. Bradshaw, a former president of Los Angeles-based Atlantic Richfield Co., became RCA’s chairman in 1981.

“Talks? I don’t know if talks is the right word,” Wasserman said in the November interview. “Brad’s a friend of mine; we shot the breeze. I wouldn’t call them talks at that point in time.”

Library of TV Shows

Industry sources assume that MCA, in its eagerness to merge with a TV network, would be willing to divest its television syndication business to comply with Federal Communications Commission rules barring networks from that business, even though MCA owns the largest library of TV shows in the industry (8,532 episodes from more than 140 series, as of last November).

But Lee Isgur, an analyst with Paine Webber, Mitchell Hutchins, predicted in a telephone interview that Wasserman won’t be willing to proceed with an RCA merger even if such talks are in the works.

Wasserman, at 72, is widely regarded as one of the ablest executives in the entertainment industry and would not be expected to part easily with the corporation that he has headed since 1946. As of January, he controlled 7.3% of the company’s stock and also serves as a trustee of various estates and trusts that own an additional 12.6%. Analysts generally assume that Wasserman would want to be chairman of any merged company.

Isgur said he suspects that Wasserman’s unfamiliarity with RCA’s electronics and communications holdings would, in the end, make the MCA chairman reluctant to proceed with a merger. “It’s not his kind of business to run,” Isgur said.

He added that Wasserman is unlikely to want to accept RCA shares in exchange for MCA shares. Isgur said he believes that Wasserman expects the value of MCA to appreciate more dramatically than RCA.

Executives in both the investment and entertainment communities reacted skeptically to other speculation that MCA might be considering a merger with Walt Disney Productions or that MCA President and Chief Operating Officer Sidney J. Sheinberg might team with film maker Steven Spielberg to try to purchase MCA’s film-making business through a leveraged buy-out.

According to the latter scenario, MCA’s real estate holdings would remain with Wasserman, who has devoted considerable energy in recent years to the commercial development of MCA’s 420-acre site in Universal City.

Sheinberg declined Wednesday to comment on any of the rumors. Spielberg and Disney Chairman Michael D. Eisner did not return a reporter’s phone calls.