MCA’s Stock Price Jumps Despite a Denial by Sony

Weekend rumors of an MCA-Sony merger prompted a burst of trading Monday in the shares of MCA Inc., despite a denial by Sony. And although some MCA executives joked publicly about the rumors, a separate disclosure made clear Monday that MCA has girded for a possible change in control, by arranging $34 million in “golden parachutes” for its top five executives.

In composite trading on the New York Stock Exchange, MCA shares closed at $56.625, up $3.875. The stock traded as high as $58.75, with 1.33 million shares changing hands, making it the ninth most-active issue on the exchange.

Meanwhile, MCA began mailing to shareholders its annual proxy solicitation, which discloses the so-called golden parachutes put in place for its top executives. If a change of control had occurred on Jan. 1 and the top five executives quit one year later, payments would range from a high of $15 million to MCA President and Chief Operating Officer Sidney J. Sheinberg to a low of $1.6 million to MCA Chairman and Chief Executive Lew R. Wasserman.

In Sheinberg’s case, the payment can be triggered if Wasserman, his longtime mentor and boss, “ceases for any reason to be chairman of the board and chief executive.”

The hubbub began early Friday evening when Los Angeles radio news station KNX-AM repeatedly broadcast news of an imminent MCA-Sony deal, which the station said would be announced before the stock markets reopened. By 11 p.m. Friday, the story had become the leading news item for KCBS Channel 2, which credited the radio station--also owned by CBS--for breaking the story.

By Saturday night, news of the purported talks was aired nationally by the NBC and ABC networks.

KNX News Director Robert Sims indicated Monday that the station is still pursuing its leads. “We felt that (our sources) were strong enough that we could go with the story,” he said, adding: “Any number of things can happen that can leave you with egg on your face.”