MGM/UA and Turner Discuss Possible Sale

Broadcasting maverick Ted Turner emerged Friday as a serious prospect to buy MGM/UA Entertainment (minus its United Artists assets). Talks under way here between the two organizations were expected to continue through the weekend.

After heavy Wall Street action Friday sent the Culver City movie company’s stock up $1.375 to a 52-week high of $18 as almost 1 million shares traded, MGM/UA confirmed reports circulating for a week that Turner was talking with the studio.

Atlanta-based Turner Broadcasting, fresh from a severe setback to its hostile takeover attempt on CBS, declined to comment on its MGM/UA talks--even after the studio acknowledged that Turner was among “various” others interested in purchasing it.

The company also named the wealthy Fayed family of Egypt again Friday as one with which it has been having sale conversations.

MGM/UA said it also has had inquiries from “other interested parties,” whom it did not identify.

Plan by Kerkorian

The three Fayed brothers, who recently bought Harrods department store in London, were disclosed as potential buyers nearly two weeks ago.

Kirk Kerkorian, MGM/UA’s controlling stockholder with a 50.1% ownership, has gradually revealed a plan to sell United Artists to MGM/UA shareholders for $500 million--thus retaining control of a big-name movie distributor--and offer MGM/UA to the highest bidder.

For more than two months, his spokesmen have been doling out tantalizing installments, first of the possible routes of a major reorganization and, more recently, of the current direction being followed.

Among other things, these have served to whet interest among potential bidders.

MGM/UA Chairman and Chief Executive Frank Rothman said Friday that he could not go beyond the brief statement confirming its sale discussions with Turner, the Fayed family and “other interested parties.” A day earlier, the studio announced a $175-million production budget for its fiscal year starting Sept. 1, quoting both Rothman and President Alan Ladd Jr.

‘Long-Term Success’

Rothman took that occasion to say that the film program would only be “enhanced” if the company does go through with its offer to sell the UA assets. And Ladd said the 1986 film budget “is an affirmation of our plans for the long-term success of our company.”

Although MGM/UA has said that all employees of MGM/UA would stay with the firm in a spinoff of UA as a full-fledged studio, it seems doubtful that Rothman would remain behind while Kerkorian opens a competing studio.

“If the (spinoff) proposal becomes a reality,” Rothman noted in Thursday’s statement, “MGM Entertainment Co. would be transformed into a new, cash-rich entity free of any bank indebtedness. Its assets would consist of all those currently held by the company, including the entire studio facility and associated properties, the film laboratory and the all-important MGM film library.

“Similarly, United Artists would be transformed by the transaction into a debt-free entity with only two assets--the UA library and a one-half ownership interest in the current MGM/UA’s motion picture distribution organization.”