MCA Inc. is close to striking a deal to buy Hanna-Barbera Productions, the animation company that holds the rights to such classic cartoon characters as Yogi Bear, the Flintstones and the Jetsons.
Hanna-Barbera, which is owned by financially troubled Great American Communications Co. of Cincinnati, has been on the block for several months at an asking price of $350 million to $400 million. Sources close to the deal said MCA is discussing an offer slightly below that price range but expects to reach an agreement.
“It could be wrapped up by the end of the summer,” said one person familiar with the negotiations.
Creative Artists Agency Chairman Michael Ovitz is representing Hanna-Barbera in the talks. Ovitz declined to discuss the deal or to confirm his involvement.
One complication in reaching a deal is a long-term distribution agreement that binds Hanna-Barbera to Worldvision Enterprises Inc.
Worldvision, which is owned by another Great American affiliate, Spelling Entertainment Inc., holds the domestic and international rights to more than 5,000 half-hour episodes of Hanna-Barbera cartoons. MCA, which has its own distribution system, reportedly is trying to negotiate a deal under which Hanna-Barbera’s ties to Worldvision could be severed.
Sources said that as many as a dozen companies have considered making an offer for Hanna-Barbara during the past several months, including Walt Disney Co., Hallmark Cards Inc. and the French firm L’Oreal.
MCA, the entertainment conglomerate that was acquired recently by Matsushita Electric Industrial Co. of Japan, already has close ties to the animation company. Its Universal Studios Florida theme park includes a Hanna-Barbera attraction, and the studio co-produced and distributed a motion picture based on the Jetsons cartoon last year.
MCA, which is in stiff competition with Disney for theme park business, reportedly would feature the Hanna-Barbera characters even more prominently in its Florida and California parks and would base television and movie projects on the characters.
Hanna-Barbera generated pretax cash flow of $16 million in 1990 on revenue of $99 million, according to Ned Zacher, an analyst with Duff & Phelps, a Chicago investment firm. Zacher estimated that a sale of Hanna-Barbera could fetch $300 million to $400 million.
“The value of this asset is in the eye of the beholder,” said Zacher, who noted that the company’s cash flow would not justify such a steep price. “There may be some intangible value in being acquired by another entertainment company.”
Hanna-Barbera’s parent, Great American Communications Co., is 68% owned by American Financial Corp., the private holding company controlled by investor Carl Lindner and his family.
Lindner acquired Hanna-Barbara when he bought Taft Broadcasting Co. in 1987 for $1.5 billion. Since then, Lindner has tried to reduce its crushing debt load. Earlier this year, he repurchased $225 million in face value of Great American’s junk bond debt at a discount.
Great American lost nearly $39 million last year on revenue of $322 million, and its long-term debt stood at $1.1 billion on Dec. 31. The company last year spent $146 million just in interest payments. Its current debt load stands at about $950 million.