Spelling to Yield Control to Lindner in Merger Plan

Aaron Spelling, one of the most prolific producers of television programs since the mid-1960s, would yield control of his company to Cincinnati financier Carl H. Lindner in a tentative merger announced Monday.

The deal calls for Aaron Spelling Productions to be combined with one of Lindner’s firms under a new holding company. A 50% voting control of the new company would be held by Lindner’s Great American Communications, formerly Taft Broadcasting, and its affiliates.

However, Chief Executive Aaron Spelling and President Jules Haimovitz, who was hired last December, will hold equivalent positions in the new entity, according to a Spelling spokesman.

Spelling has fathered such well-known ABC network shows as “Love Boat,” “Hotel,” “Dynasty,” “Charlie’s Angels,” “Fantasy Island” and “Family,” some of them with former partner Leonard Goldberg. The stock of Spelling’s Los Angeles-based firm has traded mostly in a downward direction on the American Stock Exchange since it went public two years ago at $14 a share. Spelling shares closed Monday at $7.75, up $1.125, after the announcement.

Despite a decline in network series revenue, Aaron Spelling Productions managed to increase its profits to $18.1 million for the nine months ended April 30 from $17.2 million a year earlier. The company’s revenue and earnings peaked in 1986 and declined significantly the following year, putting pressure on the company’s stock.

Lindner, 69, who built an empire based on insurance conglomerate American Financial Corp., is chairman of Great American. The company owns 15 radio and five television stations through its Great American Broadcasting subsidiary, as well as two Hollywood animation firms, former Taft subsidiary Hanna-Barbera Productions and Ruby-Spears Enterprises.

Half of Voting Stock

Monday’s announcement, which sketched only the broad outline of the deal, would result in Great American receiving a combination of cash and convertible preferred stock valued at $82.5 million. The actual cash amount was not disclosed by the parties, who said details were still being worked out.

A new holding company named Spelling Inc. would become the parent of Spelling Productions and of a Great American subsidiary, Worldvision Enterprises Inc., which distributes TV programming in the United States and abroad.

A previous 10.7% Lindner stake in Spelling’s common stock is part of the total holding by affiliates that would “equal approximately 50% of the voting stock” of Spelling Inc. after the deal, according to the announcement.

Holders of Spelling common stock would receive one share of stock in the new firm for each share of the old. The company’s proxy statement last March indicated that public shareholders owned slightly more than 50% of the stock at that time.

Aaron Spelling would own about 30% of the common stock in the new holding company, according to Ronald Lightstone, Spelling executive vice president. Presently the firm’s founder controls Aaron Spelling Productions through ownership of 100% of its Class B stock, which has twice the voting power of the common stock.

The transaction is subject to execution of a definitive merger agreement as well as approval of each company’s directors and the stockholders of Aaron Spelling Productions. Both Lindner and Spelling were quoted in the announcement as hailing the combination of Spelling Productions and Worldvision as an ideal marriage of complementary businesses.

Bought Stake Last August

Spelling, 64, who was not available for an interview Monday, was quoted as saying: “I am excited by the combination . . . as it will join one of the strongest television distribution organizations in the world with our production capability.”

Lindner called it “one of those rare combinations . . . that are perfectly complementary.” He also said the new company would “draw on the creative genius of Aaron Spelling and his team.”

Lightstone of Spelling Productions said the investment banking firm of Drexel Burnham Lambert represented the Spelling firm in the deal. Drexel Burnham also has represented Lindner interests in the past.

While declining to specify exactly how the deal originated, executives on both sides noted that Spelling and Lindner were acquainted, since Lindner bought a major stake in Spelling Productions last August, shortly after it went public.