NBC Agrees to Sell Stake in Video Venture to Columbia

NBC has agreed to sell its 50% stake in the RCA-Columbia Home Video distribution venture to partner Columbia Pictures Entertainment Inc., the companies said Wednesday.

Terms of the deal were not disclosed and several unspecified conditions must be met before completion, the companies said. But one executive familiar with the deal said the sale price was “slightly in excess of $350 million.”

Spokesman for both companies declined to elaborate on a terse two-paragraph announcement of the deal.

But industry sources said it includes the settlement of a messy legal dispute in which NBC had filed suit against its partner a year ago in the aftermath of Columbia’s 1989 acquisition by Japan’s Sony Corp. It is expected that NBC will drop the suit when the deal is completed.

The venture was created in 1981 by Columbia Pictures and RCA Corp., which was acquired in 1986 along with its NBC division by General Electric Co.

It distributes home videos domestically and overseas and was to have expired next spring.

NBC sued Columbia and Sony in March, 1990, alleging that its partners in the venture were acting in a way that undermined the value of the venture to clear the way for them to go into the same business on their own. The suit reportedly had sought damages of $250 million to $500 million.

The companies declined to say how much revenue the venture has generated or how profitable it has been. But the trade magazine Variety reported last week that RCA-Columbia’s sales over the next 11 months may exceed $600 million and that 1990 profits were estimated at $74 million.

“This is an amicable way to resolve the issue,” said one industry source. “It makes good business sense and ends a period of litigation,” another source said.

The venture distributes current motion picture and television programs from Columbia’s two film units, Columbia Pictures and Tri-Star Pictures, as well as movies from the Columbia Pictures library and films from other producers.

It is one of the five major video distributors worldwide and one of the last major home video ventures.