MCA Board Approves Key Terms of Buyout : Studio: Agreement on purchase of up to $6.85 billion by Japan’s Matsushita Electric may come today.

MCA Inc.’s board of directors Sunday night approved the key terms of a buyout offer from Matsushita Electric Industrial Co. An agreement to purchase the Hollywood studio for up to $6.85 billion is expected to be announced as early as today.

Negotiations in the deal, which would be the largest purchase of an American company by a Japanese firm, remained cloaked in secrecy. But sources familiar with the talks said MCA’s board approved a price acceptable to Matsushita’s bargaining team. MCA also is said to have accepted an offer mostly in cash, rather than in stock. MCA Chairman Lew R. Wasserman had long sought a stock merger to avoid heavy tax payments for shareholders.

The approval of terms by MCA’s board was reached during a marathon meeting that began early Sunday morning in New York and ran late into the night. The 11-member board wasn’t presentedwith a tentative agreement, but was apparently asked instead to consider specific terms that were still being weighed as bargaining continued between the companies.

Spokesmen for both companies declined to comment on their talks.

Osaka-based Matsushita’s acquisition of MCA’s Universal film and television units would put a fourth major film studio in foreign hands. Columbia Pictures, MGM/UA Communications Co. and 20th Century Fox are already owned by foreign-based corporations.

One person close to MCA put the price at $72 a share, or $6.58 billion. Several sources have said the offer would pay MCA shareholders between $70 and $75 for each of the company’s 91.3 million shares. About $5 of the per-share price would be paid in stock of a spinoff company that will own MCA’s New York-area television station, WWOR-TV.

Individuals familiar with the weeks of difficult bargaining over MCA’s sale have said that Wasserman, who is 77 years old, initially expected to get between $75 and $90 a share, or as much as $8.2 billion for MCA. But Matsushita offered less, and it became clear that softening world financial markets weren’t likely to support a richer offer.

Wasserman and MCA President Sidney J. Sheinberg would remain in place with long-term employment contracts under the agreement. One person said Sheinberg would be specifically designated MCA’s next chief executive officer, but that Wasserman would choose the appointment’s timing. Individuals close to Creative Artists Agency Chairman Michael Ovitz, Matsushita’s chief U.S. consultant, have consistently said he was unlikely to take any position at MCA, despite widespread speculation in Hollywood that Ovitz would use the deal to make himself Wasserman’s eventual successor.

One source close to the talks said the key issue of management was resolved months ago. “Matsushita’s goal was the same as MCA’s goal--stability, continuity and independence,” said a knowledgeable person.

For Wasserman, the transaction would finally end persistent market pressure to find a corporate parent or merger partner for MCA, which has discussed possible combinations with Sony Corp., Paramount Communications Co., Walt Disney Co., RCA Corp. and others over the years.

Wasserman, who controls 15.3% of MCA Inc. stock directly and through various trusts, is said to have feared that no successor could hold MCA together. He also believes that media companies will need vast financial resources to survive in the future.

For Matsushita, which has been rebounding from a slowdown in the sales growth of its mainstay videocassette recorders, the MCA acquisition would provide a prime ticket into the entertainment business. MCA is Hollywood’s most diversified entertainment company, with interests in film and TV production, records, theaters, books, theme parks and other areas.

The MCA-Matsushita combination would create a corporate behemoth with 1990 sales in excess of $51 billion, according to estimates compiled by the Value Line investment service. In terms of sales, that’s nearly as large as all the other major studios and their corporate parents combined, and nearly twice as big as Sony Corp. and its Columbia Pictures unit, which will post total 1990 sales of about $27 billion, according to Value Line.

Time Warner Inc., the biggest American-owned studio conglomerate, will have 1990 sales in the area of $11 billion, according to Value Line, while Walt Disney Co. is expected to have sales of about $5.7 billion. Among American industrial concerns, only General Motors, Ford, Exxon, International Business Machines and General Electric had 1989 sales of more than $50 billion, according to figures compiled by Fortune magazine.

People close to the talks said Wasserman went into the board session with some reservations, but formed a clear position in favor of the deal during the meeting. Another source said the two sides were “wrapping up the final details” late Sunday. As talks wound down, tensions reportedly had eased considerably from last Wednesday, when the deal nearly collapsed because of a disagreement over price. “MCA got premium price for the company and Matsushita got a great deal,” said one source. “So both sides won.”

A longtime student of Japanese culture and managerial techniques, Ovitz had helped Sony in its $3.5-billion purchase last year of Columbia Pictures--the biggest previous purchase by a Japanese company of an American firm--and spent more than a year advising Matsushita in its search for a Hollywood partner. MCA, meanwhile, had scoured the globe for years, largely under the auspices of Lazard Freres & Co. Lazard Freres’ partner Felix Rohatyn is on MCA’s board, and has been a key adviser to Wasserman for years.

Ovitz first brought the plan for a Matsushita purchase to MCA last August, and word of contact between the companies surfaced in an American press report on Sept. 25, after weeks of rumors in Hollywood and on Wall Street of a pending marriage between the two.

Wasserman, Sheinberg, and Masahiko Hirata--Matsushita’s executive vice president and chief negotiator--met in Los Angeles in early October, then began serious negotiations with dinner in New York eight days ago. Hirata’s advisers included Keiya Toyonaga Sr., a managing director and member of Matsushita’s board, Ovitz and investment banker Herbert Allen Jr. Wasserman relied heavily on Sheinberg, executive vice president Charles (Skip) Paul, and attorneys Martin Lipton and Robert S. Strauss.

The talks became severely strained at times, as the two sides positioned over price and bickered about press leaks. Discussions were nearly terminated late Wednesday night, before last minute changes in bargaining positions allowed them to continue.

Wasserman’s bargaining position was clearly hurt by the severe weakness of MCA stock, which traded as low as $34.125 before the acquisition was announced, but quickly rose to over $60 a share. The stock dropped $3.125 last Friday to close at $65.375, as investors realized that any buyout would be at a price well below MCA’s original expectations.

One of the biggest winners in the deal would apparently be David Geffen, the music mogul who sold his record company to MCA earlier this year for the equivalent of about 10 million MCA shares, then valued at $54.50 each. Geffen is likely to show a profit of some $180 million if the sale is completed.

By spinning off WWOR-TV into a separate company, Matsushita can avoid government regulations that prohibit foreign companies from owning more than 20% of a broadcast license. MCA paid $387 million for WWOR-TV in 1986, and could almost certainly have found a ready buyer for the station, but wanted to avoid the lengthy license transfer process that would accompany a sale. Despite a soft TV station market, VHF outlets in major cities become available infrequently and are still coveted media properties.

Another MCA holding, Yosemite Park & Curry Co., was not expected to be part of the sale to Matsushita, sources close to the negotiations said. The Curry Co. operates tourist facilities at Yosemite.

If the purchase price for MCA dropped in the last year, it was partly because the company suffered disappointments both in its Florida theme park, which has been plagued by severe problems in key attractions, and in its powerhouse TV operation.

Times staff writer John Lippman contributed to this story.

MCA AND MATSUSHITA

MCA Inc. and Matsushita would combine to form one of the world’s largest media conglomerates. Here is a look at the two companies: Matsushita

Produces such major electronics brand names as Panasonic, Technics, Quasar, National and JVC.

The Osaka-based company, which makes everything from clothes irons to televisions and electric pencil sharpeners, is expected to earn revenues of $43.5 billion this year. That compares to $39 billion a year ago and $41.7 billion in 1988.

MCA

Assets include Universal Pictures; the Universal Studios tours in Los Angeles and Orlando, Fla.; the 420-acre Universal City grounds, which include the studio, two hotels, several restaurants and the Universal Amphitheater; the Yosemite Park & Curry Co.; 49% of Cineplex Odeon; Geffen Records; Putnam Publishing, and New Jersey-based WWOR-TV, which serves the New York market. (The television station would be spun off into a separate company because federal regulations prohibit a foreign company from owning more than 20% of a broadcast license.)

MCA is expected to earn revenues of about $3.5 billion this year. That compares to $3.4 billion a year ago and $3 billion in 1988.