Justice Dept. Seeks to Halt Metrocolor Sale to Technicolor

The antitrust division of the Justice Department said Tuesday that it will file an antitrust action here today to block Technicolor’s acquisition of Metrocolor, one of its two major competitors in processing film for Hollywood’s movie industry.

Such an acquisition could lessen competition and raise the cost of the prints shown in U.S. theaters, ultimately bringing higher movie admission fares to the public, the government said.

Los Angeles-based Lorimar-Telepictures agreed in September to sell Metrocolor to the owner of Technicolor in a $72-million deal. Technicolor is owned by New York-based MacAndrews & Forbes Group, which is controlled by financier Ronald O. Perelman. However, the completion of the sale had been held up at the request of the antitrust division.

Barbara Brogliati, senior vice president at Lorimar-Telepictures, said it would be “business as usual” in its operation of Metrocolor pending the outcome of the matter. She said it would be “inappropriate” to comment on the suit before seeing it. Lorimar bought Metrocolor from Turner Broadcasting earlier this year.

The lawsuit will allege that the proposed acquisition would violate the Clayton Act “because it may substantially lessen competition” in production of 35- and 70-millimeter prints for theatrical showing of motion pictures, Charles F. Rule of the antitrust division said.

Three Major Laboratories

Rule, an acting assistant attorney general, said U.S. movie studios primarily use three laboratories to process such prints--Technicolor, Metrocolor and Deluxe.

“If this acquisition goes forward, that number would be reduced to only two,” the official said. “As a result, studios could well face higher prices for the processing of release prints, and those higher prices could be passed on to moviegoers.”

The Perelman group had not publicly discussed its intentions about Metrocolor. However, an industry source said it was “no secret” that Technicolor was planning to close Metrocolor.

Spokesmen for the Perelman group could not be reached late Tuesday. Brogliati said her company has “no financial exposure” in the matter since MacAndrews & Forbes had agreed at the outset to assume the risks of a possible antitrust action.

The Justice Department said in its statement that it had “advised” both MacAndrews & Forbes and Lorimar-Telepictures of its intent to file the action. The government statement did not mention Dalton Enterprises. Originally, MacAndrews & Forbes said it was a limited partner and Dalton the general partner in the entity set up to take ownership of Metrocolor.

But a Justice Department source said Dalton is an affiliate of Drexel Burnham Lambert, a New York investment banker. Perelman’s group was identified last September as the general partner in CSD Acquisition, an entity set up to take ownership of Metrocolor.

In its announcement, the government agency noted that total sales in 1985 of 35-millimeter “wide release” prints for national distribution to theaters were more than $100 million.

It noted that studios generally order at least 800 of the 35-millimeter prints for national distribution on a movie.

Total 1985 sales of 70-millimeter release prints were more than $10 million, it said, adding that a limited number of the 70-millimeter prints are made for certain motion pictures. These are exhibited at specially equipped theaters.