Lorimar Will Buy Block of Warner Stock : Firm May Spend Up to $315 Million for ‘Investment Purposes’

Fueling new speculation about the future of entertainment giant Warner Communications, Lorimar said Tuesday that it plans to purchase up to $315 million of Warner stock for “investment purposes.”

Carol J. Henry, a vice president of the Culver City-based entertainment and advertising concern, said the disclosure was made to comply with a federal law designed to alert federal authorities of possible business combinations that might pose antitrust questions. The statute, the Hart-Scott-Rodino Act, requires companies in certain circumstances to disclose intended stock purchases totaling more than $15 million.

In its filing, Lorimar said it plans to purchase more than $15 million worth of Warner stock but less than 15% of the company’s 67.2 million outstanding shares. For $15 million, Lorimar could purchase only about 0.7% of the outstanding stock. Buying 15% of the shares would cost about $315 million.

Details Sketchy

Henry declined comment when asked if Lorimar would rule out a future attempt to acquire the much-larger Warner, which operates the Warner Bros. studio in Burbank. She declined to say whether Lorimar intended to purchase the shares on the open market or from current holders of large stakes in Warner. She also declined to say when the purchases would begin.

The announcement of Lorimar’s filing was made by Warner and confirmed later in the afternoon by Lorimar.

Geoffrey W. Holmes, a Warner vice president, said Lorimar officials had explained their intentions as “strictly as an investment.”

“They said their lawyers advised them . . . that it (the Hart-Scott-Rodino filing) would be good insurance if (antitrust) questions were raised later,” Holmes said.

Speculation Expected

Industry analysts, however, noted that the planned purchases were sure to ignite speculation about Lorimar’s plans and behind-the-scenes maneuvering at Warner.

Cash-rich Lorimar, which produces the TV hits “Dallas” and “Knots Landing,” early this year made an unsuccessful bid to take over Multimedia, a Greenville, S.C.-based operator of TV and radio stations. In June, Lorimar purchased Bozell & Jacobs, a big advertising agency, and indicated that it might make further acquisitions.

Meantime, New York-based Warner has been in the throes of a struggle between Herbert J. Siegel, who is chairman of Chris-Craft Industries, Warner’s biggest shareholder, and Warner Chairman Steven J. Ross. Siegel has sought to force changes that he believes will improve the company’s profitability. In June, Chris-Craft declared that it would seek to enlarge its stake in the company or form alliances with other shareholders to gain the leverage needed to cause such changes.

Merv Adelson, chairman of Lorimar, knows Warner’s Ross personally, although Warner Vice President Holmes said that “it’s more an acquaintanceship than a close friendship.” The two men became acquainted through a mutual friendship with Stephen A. Wynn, chairman of Golden Nugget, operator of hotel-casinos.

Adelson was said to be on vacation and unavailable for comment Tuesday.

Significance Uncertain

Reacting to the news, Lorimar’s stock fell 25 cents a share to close at $34.875 on trading of 22,500 shares on the American Stock Exchange. In trading on the New York Stock Exchange, Warner shares rose $1.50 to close at $31.25 as 597,400 shares were traded.

Jeffrey B. Logsdon, analyst with Crowell Weedon in Los Angeles, said the significance of the disclosure remains highly uncertain for both companies, because it may point to plans to purchase an “insignificant” stake of less than 1% or a sizable stake of nearly 15%.

But he said that, if Lorimar does plan no more than an investment, the move may be highly profitable. He noted that Warner has raised cash and cut its debt with the sales of its cable-TV properties and has good prospects in its movie and record units.

He said the power struggle between Ross and Siegel may also bring a large profit if it ends in a breakup of the company or buy-out of shares.

“The company has now got a profitable record division and one of the two best studios in town,” he said. “Basically, I can see little downside risk.”

May Frighten Investors

Only Monday, Warner said Viacom International had agreed to buy its interest in MTV Networks and Showtime/The Movie Channel for $500 million plus warrants valued at about $18 million.

Another analyst, Lee Isgur, of the Paine Webber brokerage in New York, predicted that the announcement would frighten investors in Lorimar by raising the possibility of a risky takeover attempt. Lorimar has “great relationships with the TV networks, they’ve got lucrative syndication rights,” Isgur said. “Investors don’t want the company to start getting involved in a lot of risky plays. They don’t want a company that’s going to act like (Texas oilman and takeover artist) T. Boone Pickens.”

For the year that ended July 31, 1984, Lorimar earned $11.7 million on revenue of $236.2 million. Warner earned $13 million on revenue of $2.02 billion in the fiscal year that ended last Dec. 31.