Lorimar, Telepictures Agree in Principle to Stock-Swap Merger

Television producer Lorimar and syndicated TV show distributor Telepictures Corp., two prosperous and acquisition-minded entertainment firms, agreed in principle Monday to merge and operate as Lorimar-Telepictures.

Lorimar shareholders would receive 2.2 shares of Telepictures common stock for each Lorimar share that they now own. At the current market price of Telepictures stock, the total value of the shares being exchanged for those of Lorimar would be $277.4 million.

Based in Culver City, Lorimar is best known for such network series as “Dallas,” “Knot’s Landing” and “Falcon Crest.”

New York-based Telepictures has five shows on television networks and independent stations this fall: “People’s Court,” “Let’s Make a Deal,” “Love Connection,” “Catch Phrase” and the new animated children’s program “Thunder Cats.”

Telepictures also is a partner with Rolling Stone Publications in US magazine and owns four television stations plus an interest in a fifth.

Bid for Multimedia

Lorimar made an unsuccessful bid to become a TV station owner early this year. Its $1-billion bid to buy Greenville, S.C.-based Multimedia, which owns five TV stations as well as radio and newspaper properties, was rejected.

Entertainment analyst Lee Isgur said Monday that the strengths of Lorimar and Telepictures, both of which have expanded into new areas and increased revenues greatly in the last two years, appear to make them a “good fit.”

The companies said Merv Adelson, currently Lorimar’s chairman and chief executive, would hold the same titles in the combined firms. The announcement also said Telepictures Chief Executive Michael Jay Solomon would join Lorimar President Lee Rich and three other Telepictures officers in an office of the president to be formed to manage the merged operations.

About 47% of Lorimar’s stock is held by Adelson, Rich, co-founder Irwin Molasky and Rich’s ex-wife, according to recent financial reports. Reports also show that 21% of Telepictures is owned by its officers and directors.

Analyst Isgur of Paine Webber said Lorimar (with $260 million in revenue last year, compared to Telepictures’ $107 million) is likely to be the dominant partner. But, Isgur added, the setup could be viewed as “sort of like Congress and the President.”

Approval by Directors, Holders

The announcement said the completion of the deal was subject to execution of a definitive merger agreement and approval by each company’s directors and shareholders, as well as certain regulatory approvals.

Representatives of both Lorimar and Telepictures said they could not go beyond the terse announcement to answer questions, pending presentation of the proposed merger to their respective boards today.

Lorimar’s stock rose $2.125 a share Monday on the American Stock Exchange, closing at $33.75. In over-the-counter trading, Telepictures stock dropped $1.75 to close at $16.375.

Both firms have reported both increased earnings and revenue thus far in fiscal 1985.

Lorimar, whose revenue grew to $260 million in fiscal 1984 from $174 million a year earlier, reported $302.2 million in revenue for its first nine months ended last April 27. It has earned $27.4 million for the nine-month period reported to date. The syndication of “Dallas” reruns has been credited with a major part of its increased revenue.

Telepictures, whose revenue jumped to $107 million in the year ended Dec. 31 from $71 million a year earlier, has reported that six-month revenue as of June 30 already has reached $64.6 million. Its profit for the period was up 67% to $3.85 million. The number of its shows being aired and its acquisitions have contributed to its rising revenue.

No one would say Monday how long ago the parties began talking merger. Lorimar announced Sept. 20 that it was streamlining and restructuring its management operation “to handle its expansion, diversification and recent acquisitions.”

In that restructuring, the vacant office of chief operating officer was eliminated and its responsibilities redistributed to Adelson, Rich and others. Earlier last month, Lorimar announced that Russell Goldsmith had resigned as chief operating officer to head an investment group.

Lorimar’s recent acquisitions have included Bozell & Jacobs, a New York-based advertising agency, and Karl Video, a producer, distributor and marketer of original video programming.

Telepictures, which greatly increased its television production activities in 1983 by acquiring Rankin/Bass Productions, expanded its broadcasting holdings earlier this year by acquiring KSPR-TV in Springfield, Mo., and an interest in the new KCPM-TV in the Chico-Redding area of Southern California. It also owns KMID-TV in the Midland-Odessa area of Texas and two TV stations in Puerto Rico.

Telepictures has produced movies and miniseries for television, including “Ellis Island” and “Surviving.” It distributes syndicated shows in both the domestic and international markets.

TELEPICTURES AT A GLANCE Millions of dollars

6 months ended June 30 Year ended Dec. 31 1985 1984 1983 1982 1981 1980 1979 Revenue 64.6 107 71 46 13 17 8 Net income 3.8 9.32 6.06 4.43 0.68 1.47 1.04

LORIMAR AT A GLANCE

LORIMAR’S EXPANSION EFFORTS

March, 1983 -- Buys Kenyon & Eckhardt, an international advertising agency, for $21 million and other compensation, with plans

to produce both entertainment and advertising for TV shows.

October, 1983 -- Discusses possible joint venture with MCA to operate a Florida theme park; plans are later tabled.

August, 1984 -- Acquires Karl Video, a Newport Beach producer and marketer of programming on videocassettes, for an undisclosed sum.

April, 1985 -- Offers $1 billion for Multimedia, a Greenville, S.C., newspaper and broadcasting concern, as part of Lorimar’s plan to own TV stations; bid is rejected.

June, 1985 -- Acquires Bozell & Jacobs, a New York advertising agency, for $40 million, and merges it with Kenyon & Eckhardt.

August, 1985 -- Announces plans to buy up to 15% of Warner Communications for “investment purposes.”

October, 1985 -- Agrees to merge with Telepictures, a fast-growing syndicator of TV programs.

Millions of dollars

9 months ended April 27 Year ended July 31 1985 1984 1983 1982 1981 1980 1979 Operating Revenues 302.2 260 174 168 126 99 82 Net income 27.4 11.7 8.8 1.1 7.0 6.9 4.8