Turner Seeks Delay in MGM Takeover Plan

Turner Broadcasting System sought a delay Monday in its planned acquisition of MGM/UA Entertainment, citing ongoing negotiations to sell some of the movie studio’s assets to Viacom International.

Culver City-based MGM/UA promptly agreed to schedule its stockholders meeting for Jan. 21, 1986, and set Dec. 16, 1985, as the date determining shareholders’ eligibility to vote. The companies had initially anticipated completing their merger by mid- to late December.

Viacom disclosed earlier this month that it is negotiating to buy a 50% interest in “one or more of the assets and businesses of MGM.” Industry sources said Monday that Viacom is considering paying about $200 million for a 50% stake in MGM’s studio production unit and home-video business and a 25% interest in a new motion picture distribution unit that will distribute films from both MGM and United Artists.

Regardless of the outcome of the Viacom talks, however, Turner representatives vowed Monday that the Atlanta-based company will complete its $1.5-billion acquisition of MGM/UA. Under the terms of its Oct. 2 merger agreement, the Turner acquisition is not subject to financing, meaning that it must complete the purchase or face potentially ruinous costs for breaching the contract.

Confident of Success

“We will finance it with or without Viacom,” said Mike Brown, a managing director of Drexel Burnham Lambert, which is acting as Turner’s investment banker for the MGM/UA deal.

Turner Broadcasting has publicly acknowledged that it cannot finance the purchase from MGM’s cash flow, even with the planned sale of the United Artists unit to its majority shareholder, Kirk Kerkorian, for about $485 million.

Last Friday, however, Turner turned down an offer from National Broadcasting Co. to buy 50% of its Cable News Network for about $250 million, because Turner objected to NBC’s demand to assume editorial control.

Viacom also wants operating control of the MGM businesses in which it invests, according to one financial community source, who predicted that Turner might again balk at losing control. Another difficulty might arise over Viacom’s desire to separate those businesses from the merged Turner-MGM company in order to protect Viacom’s investment if the new conglomerate founders.

David Fluhrer, a spokesman for New York-based Viacom, declined comment other than to say that “negotiations continue” and to confirm that the company is still awaiting approval from the Securities and Exchange Commission for a new offering of 2.5 million shares of Viacom common stock.