Shuffle Makes Tri-Star Pictures a Columbia Unit : Move Is Seen as a Way to Increase Appeal to Any Suitor--Reportedly Sony

Tri-Star Pictures, ranked as a major Hollywood studio, has been demoted to being a unit of its affiliate, Columbia Pictures, under a “streamlining” plan announced Monday.

The announcement by Columbia Pictures Entertainment, the parent company of both studios, closely follows renewed industry reports that its biggest shareholder, Coca-Cola Co., is dickering to sell its 49% interest to Japanese giant Sony.

Industry sources said the change could have the effect of making the Columbia parent more attractive for a prospective buyer.

Columbia Pictures Entertainment, or CPE, declined to comment Monday on reports of sale negotiations or on the prospects of layoffs.

Meanwhile, the plan resulted in some immediate executive changes. Tri-Star President David A. Matalon moves to the parent’s senior management as a corporate vice president and will be succeed by Jeff Sagansky, its production head. Sagansky will to report to Dawn Steel, Columbia Pictures president, but she will report to Lewis J. Korman, named chairman of a newly created “motion picture group.”

While CPE said the unification will “allow” each production company to continue producing motion pictures, it raised immediate speculation that some separate operations--particularly film marketing and distribution--are slated to be combined.

In response to questions about this, a spokesman said: “The uniting of our two motion picture operations will be an evolutionary process. The needs and resources of the new operation will be continually evaluated as we progress.”

However, the company declined to say if it will fill Tri-Star’s vacant position for head of marketing.

Victor A. Kaufman, president and chief executive of the parent Columbia Pictures Entertainment, long has been adamant in insisting that Columbia Pictures and Tri-Star would remain autonomous studios.

Although Kaufman was not available for interview Monday, the company issued a few comments from him.

Sony Mentioned Most

He said the new structure used the talents and experience of both units and allows the corporation to focus on achieving objectives “through one combined operation.”

As for the autonomy of Tri-Star and Columbia Pictures, Kaufman said: “Things will work very much as they have in the past. It will be Dawn’s program of films, subject to my approval, based on the overall mix of films and budget.” He said that in the year and a half that Steel has headed Columbia Pictures, she demonstrated “the ability and talent” to head up an operation expanded to include Tri-Star.

Ironically, Tri-Star ranked higher in 1988 domestic box-office shares than Columbia Pictures, under which it is being subordinated in the corporate table of organization.

Tri-Star ranked No. 8 with 5.8%, while Columbia Pictures ranked No. 9 with 3.5%. Two years earlier, Columbia was No. 4 with 9.5% and Tri-Star was No. 7 with 7.1%. A spokesman said individual revenue figures for the two studio units were not available. The company said its combined 1989 release schedule should put the company “in the top tier” of box-office performance.

Coca-Cola acquired Columbia Pictures Entertainment in 1982 and helped to found Tri-Star Pictures that year. In December, 1987, Coca-Cola merged CPE with Tri-Star and Loews Theaters and reduced its 80% stake to 49%.

Periodically for many months, published reports have speculated that Coca-Cola was preparing to sell its entertainment properties or to sell off either Tri-Star or Columbia Pictures.

Sony has been the prospective partner most frequently mentioned, and last week’s surge of fresh rumors about a Columbia marriage with Sony has bolstered Columbia’s stock price. Neither company issued denials. Sony entered the U.S. entertainment business with the purchase of CBS Records.

CPE’s restructuring of its motion picture units set off new speculation about its future and the effects on its personnel.

“They’re setting it up for the new guys,” said a source close to Columbia. “A lot of heads are going to have to roll here.”

Meanwhile, analyst John Olds of Paul Kagan Associates in Carmel, Calif., said Monday’s announcement by Columbia Pictures Entertainment “seems to make sense” as “the economic thing to do.” He said the change could “position them to make them more attractive” to a potential buyer.

Not Compete for Projects

Similarly, he noted that MGM/UA Communications had recently decided to produce pictures only through its MGM unit and thereby cut overhead. MGM/UA has also had some or all of its operations on the market in recent months.

Korman, the new chairman of CPE’s Motion Picture Group, has been the company’s chief operating officer. “It’s not our intention that Columbia Pictures and Tri-Star Pictures compete for projects,” he said. “We expect that film makers will approach whichever company they choose based on their relationships with our executives and the chemistry which has been established over time.”

Matalon, who has headed Tri-Star, “will be able to work with us in planning our entertainment strategies for the 1990s,” Kaufman said. He said Tri-Star would “continue to benefit from his knowledge and experience.”