Columbia May Raise Tri-Star Stake

Columbia Pictures Industries stands to obtain control of Tri-Star Pictures if it completes negotiations under way to buy about half of the 25.5% stock holding owned by Home Box Office, a Time Inc. subsidiary. Columbia already owns a 25.5% interest.

Confirming the negotiations Friday, Tri-Star also announced that “various” investors have bought out CBS’ 6.25 million shares, thus breaking up the third 25.5% holding. The buyers were “primarily” institutional investors in a sale arranged by Allen & Co., Tri-Star spokeswoman Leslie Jacobson said. The public now owns 49% of Tri-Star, a movie studio formed almost three years ago by CBS, Columbia and HBO.

It was later disclosed by CBS executive Anne Luzzatto that Columbia itself kicked in $6.25 million, or $1 a share, to CBS as a “supplement” to the $48.4 million, or $7.75 a share, that the investors paid. Luzzatto, a vice president of corporate information, said she did not know the reason for Columbia’s payment. However, Tri-Star’s Jacobson said in response to a question that it was “an inducement for CBS to sell.”

The departure of CBS, a member of the original triumvirate that started the studio and then sold about one-fourth of the stock to the public, is expected to pave the way for Tri-Star to go into television production, in addition to making feature films. Under federal law, the studio was barred from TV production because the owner of the CBS television network was a major stockholder.

CBS received net proceeds of $53.125 million, or $8.50 a share (including Columbia’s payment). The total was after a 25-cents-per-share fee of $1.56 million that CBS paid to Allen & Co., a New York investment banker, according to the CBS figures.

CBS and its two original partners invested about $100 million total in Tri-Star after its founding in February, 1983. CBS said Wednesday, when it reported a third-quarter loss of $143 million, that it was selling its Tri-Star interest, as well as disposing of other assets.

Earlier this year, CBS pledged to sell assets over the next two years that would yield an after-tax profit of $300 million and apply the proceeds to reduce the $950-million debt that it took on while fending off broadcaster Ted Turner’s attempted hostile takeover.

Columbia, owned by Coca-Cola since 1982, has been beefing up its management and seeking to find a solution to its problems in achieving box-office successes this year. Two major disappointments last summer were “St. Elmo’s Fire” and “Silverado.”