Lorimar Ends Deal for Miami TV Station

Lorimar-Telepictures said Wednesday that it has abandoned a plan to acquire a Miami television station from Wometco Broadcasting but will press ahead with its deal to acquire six other TV stations from Storer Communications at a slightly reduced price.

Culver City-based Lorimar said Storer has agreed to reduce the price by $30 million and said the stations’ operating results might dictate further price cuts. At the same time, Lorimar said it will save an additional $405 million by scrapping the Wometco deal.

The new purchase price is $1.42 billion, compared to $1.85 billion announced last May, when Lorimar first disclosed its plans to acquire the seven stations. All seven are controlled by Kohlberg Kravis Roberts & Co., a New York investment firm that led private buyouts of Wometco and Storer in 1984 and 1985, respectively.

Institutional investors balked at Lorimar’s first proposal to finance most of the acquisition through high-risk, high-yield bonds. Some predicted publicly that the stations would not generate enough cash to pay for the purchase. Since then, Lorimar has explored several other financing alternatives with the help of its investment banker, Drexel Burnham Lambert.

“It’s the first time I’ve seen (Michael) Milken go into the marketplace and come up empty,” said an investment banker at another firm, referring to Drexel’s best-known bond trader and acknowledged leader in the so-called junk bond business.

The banker noted that Lorimar, as a loyal Drexel client, has often purchased junk bonds issued by other Drexel clients, and he expressed surprise that Drexel couldn’t drum up more support for Lorimar.

In a prepared statement, Lorimar Chairman and Chief Executive Merv Adelson said: “After careful analysis of the overall broadcast acquisition, we concluded that excluding WTVJ-TV from the transaction made the package more economically viable.”