Arrest Lifts Cloud From Entertainment Firms

The arrest Thursday of Lyle Menendez in the murder of his parents appeared to lift a cloud from Carolco Pictures and Live Entertainment, the Hollywood companies where his father worked.

Jose Menendez, who was murdered at home with his wife, Kitty, last Aug. 20, had been chairman of Live, a video and music distributor. He also served on the board of Carolco, an independent film producer that controls a major stake in Live.

In the wake of the murders, both companies received close scrutiny as police investigators and the media sought clues to the murders in the companies’ complex business connections. Police sources initially said the brutality of the killings indicated that they could have been a mob “hit.”

A Beverly Hills police spokesman declined to make any explicit statement about the companies Thursday afternoon. But the arrest of Lyle Menendez, and the search for his brother, Erik, in connection with the murders appears to end the Menendez ordeal as far as the companies are concerned.

Live’s board, which met Thursday in a session scheduled before the arrest was disclosed, said in a statement: “We are shocked and saddened by this turn of events. We extend our sympathy to all members of Jose and Kitty Menendez’s families.”

A Live spokesman declined to comment on the results of an internal investigation that the company had commissioned from an outside law firm after the murders. One individual close to the company said the Live board was to receive the internal report at its meeting.

While neither Carolco nor Live changed the course of their businesses as a result of the killings, both operations found their morale initially shaken--and Live’s stock suffered a sharp drop from which it never recovered.

After trading as high as $24.625 a share in over-the-counter trading in the weeks before the murders, Live’s stock dropped to $16.75 immediately after the killings and closed at $16.25 on Thursday. Trading closed before the arrest was made public.

The Van Nuys-based video company still hasn’t replaced Menendez as chairman, despite a months-long search for a new chief executive.

Carolco, which is based in Los Angeles, is best known as producer of the “Rambo” films.