Lorimar Cuts Price It Will Pay for TV Station

The rapid decline in values of some broadcast properties was underscored Thursday by Lorimar-Telepictures’ announcement that it has trimmed 39% from the price of a Pittsburgh television station that it agreed to purchase last July.

The Culver City-based entertainment company said it will acquire WPGH-TV, an independent station in Pittsburgh, for $21.25 million in cash instead of $35 million as initially agreed last July.

In a separate development, a Lorimar-Telepictures spokeswoman said the company has not abandoned discussions to acquire WTTV in Indianapolis, but could not determine the effect of a voluntary bankruptcy petition filed recently by WTTV’s owner.

WTTV’s owners include Michael Milken, the head of Drexel Burnham Lambert’s high-yield, high-risk “junk bond” trading, and other Drexel officials. The firm has long served as Lorimar’s investment banker.

Lorimar cited weakening advertiser demand and the overall condition of the broadcast market as reasons for the price reduction on the Pittsburgh station.

Those same reasons were cited last November when Lorimar abandoned its ambitious plan to acquire seven TV stations from Kohlberg Kravis Roberts & Co. for $1.8 billion.

Lorimar announced its plan to acquire WTTV for $85 million last July, at a time when Drexel Burnham Lambert was arranging the financing for Lorimar’s seven-station deal.

The holder of WTTV’s broadcast license, Tel-Am Holdings Inc., and two related companies filed voluntary petitions under Chapter 11 in the federal bankruptcy court in Atlanta on Dec. 23.

According to those filings, WTTV owes some of its largest sums to companies that have been frequent buyers of the so-called junk bonds sold by Drexel Burnham.

Beverly Hills-based Executive Life Insurance Co. was listed as Tel-Am Corp.’s largest unsecured creditor, with a claim of nearly $24 million. Companies controlled by Reliance Group, headed by corporate raider Saul P. Steinberg, are owed a total of $17 million, the documents showed. Tel-Am Corp. listed unsecured debts to six other companies for a total of $61.4 million.

Drexel helped some of WTTV’s executives buy the independent TV station for $73 million in 1984, issuing junk bonds and arranging other financing. Drexel later invested $1.2 million in the acquiring company, Tel-Am Corp., for a 5% stake. Certain Drexel employees and associates acquired an additional 20%.

Neither Michael Milken nor his brother Lowell, who are identified as two of WTTV’s owners by the TV and Cable Factbook, were available for comment. When asked if WTTV’s bankruptcy petition has proved embarrassing for Drexel or the Milkens, a Drexel spokesman said, “Nobody likes to see a company go into bankruptcy; we still believe that there is some value in the company.”

Lorimar spokeswoman Barbara Brogliatti confirmed Thursday that the company still has not applied for transfer of WTTV’s license. “We won’t until we have a deal,” she said.

By contrast, the Pittsburgh sale, announced on the same day last July, won FCC approval late last month, and is scheduled to close on Jan. 15. The selling company is Meredith Corp., headquartered in Des Moines.