MTV Considers $469-Million Bid : Investment Group Seeks to Take Firm Private Again

Almost a year to the day after it first sold stock to the public, MTV Networks, operator of a pioneering 24-hour rock-video channel on cable television, said Thursday that it is considering a $469-million offer to take the company private again.

The offer is from Forstmann, Little & Co., a New York investment firm that specializes in leveraged buy-outs, and unnamed executives of MTV.

The group is offering $31 a share for all 15.2 million MTV shares, one-third of which are held by the public and the rest by Warner-Amex Cable Communications, a joint venture of American Express and Warner Communications. In addition to Music Television, MTV Networks operates two other 24-hour cable-TV services--the Nickelodeon children’s channel and the VH-1 music-video channel that was launched in January and aimed at an older audience than the original MTV.

MTV Networks stock closed Thursday at $30, up $2.625 in over-the-counter trading. That is double its initial offering price of $15 in August, 1984.

Last month, American Express offered $450 million for Warner Communications’ stake in Warner Amex. If accepted, American Express then plans to sell all of Warner Amex for $900 million to Time Inc. and Tele-Communications, which also have agreed to assume about $500 million of Warner Amex’s debt.

Under their partnership agreement, Warner Communications has until Wednesday to either accept American Express’ bid or to buy American Express’ 50% stake at the same price.

According to one source in the financial community, Warner’s board is expected to meet today, with the likely outcome being an offer to buy out American Express’ interest for $450 million.

If Warner then sells its two-thirds stake in MTV Networks to the Forstmann, Little group for $312.6 million (two-thirds of the total $469 million being offered), Warner would end up as the sole owner of the remaining assets of Warner-Amex--principally a group of big-city cable-TV systems--for just $137.6 million (its $450-million payment to American Express minus the $312.4 million that it would receive for MTV).

Some also speculated that the Forstmann offer would smoke out another bid for MTV, perhaps from Viacom International, another major cable-programming firm, the source said.

MTV spokesmen declined to identify the company executives involved in the buy-out offer. However, a high-level Warner source told The Times that the group includes David H. Horowitz, president and chief executive, and Robert W. Pittman, executive vice president and chief operating officer.

“They (MTV executives) are simply trying to gain control of valuable assets,” industry analyst Paul Kagan said. “It’s part of an overall trend of all the media deals we’re seeing--another group wanting to buy a company, in this case themselves.”

The MTV rock-video channel has experienced strong growth--from an initial audience of 2.2 million households in 1981 to more than 27 million this year, the company said. In the first six months of 1985, MTV Networks reported a profit of $7.15 million on revenue of $64.6 million.

MTV at a Glance The company operates two video music televison channels, Music Television and VH-1 as well as Nickelodeon, a children’s cable-TV channel. It is controlled by Warner-Amex Cable Communications, a joint venture of American Express and Warner Communications.

In millions of dollars Music Television 1985* 1984 Revenues: From cable operators 17.5 11 Advertising 83 62 Nickelodeon Revenues: From cable operators 28 21.5 Advertising 8.5 6 VH-1 Advertising 7 0

*Estimate by Paul Kagan & Asso.