Roach Studios Names Some Major Investors

Hal Roach Studios, which recently sold 30% of its stock for $6.75 million and has hinted at ambitious expansion plans, has disclosed that previously unnamed “prominent entertainment industry executives” in the investor group include well-known Hollywood figures A. Jerrold Perenchio, Ray Stark and Ted Mann.

Another previously unidentified major investor in the venerable Los Angeles film company is Outlet Co., a Providence, R.I., firm that owns a group of radio and television stations around the nation.

Outlet, a subsidiary of Rockefeller Center Inc., recently invested $1 million in Roach and has a right of first refusal on any subsequent offering of stock or convertible securities.

The names, along with figures showing that the aggregate stock price paid by the investors averages less than half of the current market price, were in a filing made by the studio this week with the Securities and Exchange Commission.

In addition to entertainment entrepreneur Perenchio (who invested $650,000), film producer Stark ($250,000) and movie theater magnate Mann ($50,000), the company’s filing identified several television and broadcasting figures who have joined management at Roach.

Until now, the studio’s best-known achievement was its production more than 50 years ago of numerous classic comedy films, including those of Laurel and Hardy, under industry pioneer Hal Roach, who is no longer associated with the firm.

New management figures include President and Chief Operating Officer Robin French, former senior executive vice president of Embassy Communications; Vice Chairman Hal Gaba, former president of Embassy Pay Television; Albert Krivin, former president of Metromedia Broadcast Group; Bruce Sundlun, Outlet’s chairman; and Executive Vice President David Evans, former managing director of General Television Corp. in Australia. Another investor is Roy Doumani, chairman of Beverly Hills-based World Trade Bank.

Embassy, where both French and Gaba worked before joining Roach, was owned by Perenchio and television producer Norman Lear until it was sold recently to Coca-Cola, parent of Columbia Pictures.

French, Gaba, Krivin and Sundlun were named to Roach’s expanded board of directors, with five seats retained by Toronto-based International HRS Industries, a publicly traded firm. International HRS is controlled by the family of Hal Roach Chairman Earl A. Glick. The firm’s stake in Hal Roach fell to 45% from 54% as a result of the new investors, according to the SEC filing.

Several Years of Losses

In a recent announcement disclosing the changes but not identifying the investors, Glick said: “The association with experienced financial, marketing and production executives will better enable the company to achieve its goal of becoming a fully integrated entertainment and communications organization.”

Hal Roach has been running in the red for several years while developing several new operations. A major activity involves its new technology for “colorizing” classic black-and-white films. It also markets the Singing Machine, an electronic sound-enhancing system with a library of musical backgrounds of popular songs, through large retail chains.

In addition, the studio is doing its own syndication of vintage theatrical and television films from its own library, as well as videocassette manufacturing. It also has a fledgling television production and distribution operation.

While side-stepping questions about the role of its investors in connection with its proclaimed goal, Glick said in a telephone interview Thursday: “Let’s just say that having these people interested in our company is very important. We’re hoping the relationship will lead to bigger and better things.”

High Costs Blamed

Glick said the studio during the 1950s was a large supplier of programming for television. Then the company “fell back to its library, which was syndicated by others.”

Asked about the firm’s losses ($3.8 million in the fiscal year ended last March 31 and $2.1 million in the previous year), Glick said they were primarily caused by “very high” costs of developing its new operations.

The company’s new filing with the SEC indicated that the investors bought in at bargain prices. Compared to recent trading of Roach stock at about $6.75 a share in the over-the-counter market, the investors on Oct. 31 paid $2 million for 750,000 shares, or an average of $2.67 each. In late August, the investor group paid $1 million for its initial 250,000 shares, or $4 each. The over-the-counter price just before the first purchase was $6.25 bid.

Voting Agreement

The filing shows that French and Gaba’s ownership also includes a subordinated debenture convertible into 1 million shares of common stock, for which they paid $3.75 million.

Amounts invested in common stock by the group include $400,000 by Gaba, $300,000 by French, $200,000 by Doumani and $150,000 by Krivin.

Under a voting agreement among the new investors, the company and International HRS, by-laws can only be changed by a two-thirds vote of the board. It also provides that any shareholder proposal to change the size or proportion of the board will be voted against by the parties. The agreement also specified that Gaba, French, Krivin and Sundlun would become directors.