RJR Nabisco Considers Sale of ESPN Stake

RJR Nabisco Inc., the food and tobacco giant that has been looking for ways to reduce the debt incurred in its record buyout deal, said Tuesday that it has hired a financial adviser to help it decide what to do with its 20% stake in ESPN Inc., which operates a cable sports network.

Capital Cities-ABC Inc. owns a controlling 80% interest in ESPN, the nation’s largest cable network with 52.4 million subscribers.

RJR Nabisco, acquired for $24.5 billion in April by a group led by buyout specialists Kohlberg Kravis Roberts & Co., said it had retained Lazard Freres & Co. to advise it on the ESPN stake.

“We have had several inquiries from parties interested in acquiring our stake in ESPN,” Louis V. Gerstner Jr., chairman and chief executive of RJR Nabisco, said. “However, we have not decided whether we will sell our stake. Lazard will help us evaluate our alternatives.”

RJR Nabisco is looking for ways to raise cash through asset sales in an effort to reduce the huge debt incurred in the buyout.

It has said it intends to sell about $5.5 billion in assets to reduce debt and has announced about $2.6 billion of such transactions, mostly the sale of five Nabisco food companies in Europe.

Nabisco Brands Inc., an RJR subsidiary, acquired the ESPN stake for $60 million in 1984 from ABC Video Enterprises. At the time, Nabisco Brands was beginning to become heavily involved in sports marketing.

RJR’s new management has indicated it is reviewing the company’s marketing efforts and is likely to reduce its involvement in sports marketing.

Some industry analysts questioned whether the ESPN stake would have any significant value to anyone other than Capital Cities because the giant media concern will control ESPN no matter who owns the minority stake.

RJR spokesman David Kalish said Capital Cities-ABC has the right to match any bona fide offer that might be made for the ESPN stake held by RJR.

Capital Cities-ABC said it had no comment on RJR’s statement.