MCA Is a Plum That Tantalizes Donald Trump

Entertainment giant MCA Inc. has a multibillion-dollar collection of assets tempting enough to whet the appetite of an operator with the means and the ambition of a Donald Trump.

As MCA disclosed Friday, the flamboyant New York real estate developer has bought a small stake in the company and says he may purchase as much as 24.9%.

But despite frequent rumors of a takeover of MCA in recent years, no challenger has appeared to test the company’s formidable defenses against an unwanted suitor.

The empire of Lew R. Wasserman, MCA’s 74-year-old chairman and chief executive, is particularly rich in real estate, something that is near and dear to Trump’s heart.

Sprawling Universal Studios in the San Fernando Valley is MCA’s crown jewel as well as its headquarters. The 420-acre property is a Hollywood studio in the grand style, and additions over the years have included its studio tour, a performing arts amphitheater, offices, hotels, restaurants and the latest in multiple-screen movie theaters.

Besides its movie and television operations, MCA boasts a massive film library and a substantial record business. Among its most recent projects is a 444-acre, state-of-the-art Universal Studios Florida project, in partnership with Cineplex Odeon, on which work was recently begun. Also, as part of a burgeoning competition with Walt Disney Co. in the theme park business, MCA announced just last month that it is joining with Nippon Steel Corp. of Japan to develop a Universal Studios Japan.

Among other assets, MCA owns a major independent television station in the New York market, WWOR.

In recent times, with Wasserman ceding more day-to-day operating power to President Sidney J. Sheinberg--and especially when the chairman was hospitalized last summer for surgical removal of colon polyps--Wall Street has been galvanized by rumors that Wasserman might be prepared to step down and even to sell his sizable MCA interest.

But except for sporadic, rumor-driven run-ups in its price, MCA’s stock has not been been performing well of late.

Before the Trump announcement Friday, the stock was languishing below $40, compared to its 52-week high of $64.50. It took a drubbing in the October market crash, prompting MCA to announce that it intended to buy back as many as 10 million, or 13%, of its shares. There has been no report from the company on how many shares it has bought, but it may be “a little more than 3 million,” according to analyst Alan Kassan of Shearson Lehman Hutton.

When not discussing MCA’s breakup value, analysts these days tend to dwell on the problems of its core operations in film and television production.

Basically, the company has been plagued by instability in its movie operation and problems in containing budgets for its one-hour TV shows, which as a category have fallen from network favor.

$40-Million Failure

More than half of Universal’s theatrical film releases last year drew meager box-office receipts of less than $5 million each. The studio that made box-office history with “Jaws,” “E.T., the Extra-Terrestrial” and “Back to the Future” could boast only of two hits last year, “Dragnet” and “Secret of My Success.” Its worst fiasco, still an embarrassment although it was made back in 1986, was the $40-million “Howard the Duck.”

In a management shakeup in December of that year, MCA recruited a well-connected entertainment lawyer, Thomas Pollack, to run the film division. Analysts believe that it is still too early to judge his performance.

As for the company’s television, which for many years was an enviable powerhouse in network programming, the producer of “Miami Vice” and “Murder, She Wrote” also has had some trouble developing successful new shows for the networks but has many money makers in syndication.

MCA’s net profit in 1987 dropped 9% to $137.2 million, which the company attributed to a $36.4-million loss in its toy products division. Operating income increased for the filmed entertainment, music entertainment and book publishing divisions.

But the company remains unsettled by the recurrent furor on Wall Street over its future.

When Wasserman was hospitalized last July, the company took a major step to make itself less vulnerable to any unwanted suitors who might be poised to move against the company.

The board adopted a “poison pill” plan that would give shareholders the right to purchase a total of 760,000 shares of new preferred stock “to guard against partial tender offers and other abusive tactics.”

If a raider were to acquire 20% or more of MCA’s stock, the rights would enable MCA shareholders to buy their company’s common stock at a deeply discounted price.

As for the shadow of Trump, one high MCA executive said Friday: “There must be 800 white knights who would do a deal if we ever really got in trouble.”

Staff writer Michael Cieply contributed to this story.

MAJOR MCA ASSETS

Real Estate

420 acres in Universal City. Includes 1.5 million square feet of office space in 3 buildings; 33 sound stages; 1 hotel; 3 restaurants; 75-acre Universal Studios and tour; Universal Amphitheater.

50% stake in 414 acres in Orlando, Fla., owned jointly with Cineplex Odeon. Scheduled for development as a film and TV studio attraction.

Music, Film and Broadcasting

Film library comprised of more than 3,300 theatrical features and feature-length productions and 12,500 television episodes.

Film distribution facilities. Several around the country, plus office building in Toronto.

50% stake in movie exhibitor Cineplex Odeon.

Music facilities. Includes record pressing and tape production plants in Illinois, New York state, West Germany. Recording studio in Glendale.

WWOR-TV, an independent station in Secaucus, N.J.

50% interest in USA Network, an advertiser-supported cable TV service.

Toy Product Operations

LJN Toys, a developer and marketer of toy products worldwide.

Retail and Mail Order Operations

Several offices and warehouses, mostly in New Jersey; 20 acres in Atlantic City, N.J.; many leased facilities.

Spencer Gifts, operates retail gift stores, jewelry stores and kiosks nationwide.

Intrigue jewelry stores and kiosks.

A2Z-The Best of Everything shops.