Firm Expands Internal Probe of Murder : Live Entertainment Hires More Lawyers in Menendez Case

Top executives of Live Entertainment, meeting with analysts to reassure them following the unexplained murder of the company’s chairman, disclosed that a second law firm has been retained to assist with the internal investigation of the crime.

Executives said they have hired the firm of Kaye, Scholer, Fierman, Hays & Handler, which they said has no prior connection to the video and recorded music entertainment company. Pierce O’Donnell, a partner in the firm’s Los Angeles office, will lead the investigation into the Aug. 20 murder of Jose E. Menendez and his wife at their Beverly Hills home, they said.

Peter M. Hoffman, acting chairman and chief executive, said the investigation will look into the life of Menendez and past business activities of Live Entertainment and its subsidiaries. He said the firm had decided to give the investigation to Kaye Scholer on the advice of its regular law firm, Paul, Weiss, Rifkind, Wharton & Garrison.

Seek New Chairman

Hoffman also said that, while the company has heard nothing directly from Beverly Hills police, “sources” say the police “have absolutely no information as to the solution of this crime.”

Officials also disclosed that they have hired the executive search firms of Russell Reynolds Associates and Fell & Associates to help search for a new chairman.

Hoffman told analysts that the murder “has no effect on the business . . . other than the loss of the man. . . . As an executive, he was as replaceable as we all are.”

On another topic, officials disclosed that Live Entertainment’s earnings will fall below most analysts’ earlier estimates for the year, due to a lack of major videocassette hits and top-selling new music albums. The firm expects to earn $1.40 a share, compared to a prevailing Wall Street estimate of $1.75 a share.

In over-the-counter trading Wednesday, Live Entertainment stock dropped $1.125 a share to close at $14.875. The Wednesday meeting with analysts occurred after the close of trading. The stock traded as high as $25 a share shortly before Menendez’s death.

Hoffman said there was no connection between the company’s recent travails and the decision of a shareholder in Carolco, which owns a major block of Live Entertainment stock, to sell his shares. Andrew Vajna, a co-chairman of the movie production company, has decided to sell his nearly 36% stake because of “personal life choices and his decision to take a different role in the film business,” Hoffman said. “Everybody close to the company knows it has nothing to do with problems in the business.”