MGM/UA Board Fails to Discuss Rumored Bids

MGM/UA Communications Co. directors met Tuesday in a regularly scheduled meeting but adjourned 90 minutes later without discussing any of the takeover bids rumored to be under consideration by diverse entertainment companies, two sources said.

“We haven’t been contacted,” one company executive said, although he added, “There could be something very well going on out there.” The executive--who spoke on condition that he not be identified--pointed to the active trading of MGM/UA shares on the New York Stock Exchange, where the price climbed $1.75 to close at $21.

Beverly Hills-based MGM/UA last month terminated a $1.5-billion sale to the Australian Qintex group because Qintex failed to deliver a $50-million letter of credit by a Sept. 22 deadline. The collapse of the sale prompted a MGM/UA lawsuit against the Australian company and the expectation that new bids would materialize.

One of the most interested candidates is said to be United Artists Entertainment, the Denver cable television and movie theater company that is 55%-owned by Tele-Communications Inc., the nation’s largest cable operator. UAE’s stock closed at $20, down 12.5 cents in over the counter trading.

Another potential buyer is reportedly Turner Broadcasting System Inc., if Turner can persuade directors with clashing agendas to permit a bid. Both Tele-Communications and Time Warner control significant blocks of Turner stock, and they are quarreling on several fronts in the cable TV industry.

Tele-Communications, which has an 11.8% voting stake in Turner, is believed to favor some kind of bid because the MGM/UA films could feed the Turner or other cable networks. Tele-Communications has appeared keen to strengthen Turner and other cable networks not affiliated with Time Warner, which controls the leading pay cable company as well as Warner Bros. studio.

Tele-Communications could go in any of several directions: It could make its own bid, endorse a bid by UAE, encourage a joint bid with Turner or solicit the participation of other cable operators as well.

Support from Time Warner, which votes 8.3% of Turner shares, is less certain. Time Warner has complained publicly about Tele-Communications’ recent investment in another competitor, Viacom Inc.’s Showtime pay cable network, which filed a $2.4-billion antitrust action against Time Warner earlier this year.

With the exception of Columbia Pictures Entertainment, every major Hollywood studio--and several minor players--looked over MGM/UA’s assets last year after the company said it would consider a sale. The strongest bid came from 20th Century Fox Film Corp. and its parent company, News Corp., but Qintex topped their last offer of $23.16 per share in September with a $25-per-share bid.

On Tuesday, a source close to News Corp. and Fox said no effort has been made to revive an offer, although he did not rule out the possibility.