Curtain Falling on Video Venture : Divestiture: Bergen Brunswig is negotiating to sell the Commtron videocassette distributor it acquired in ’82. Wall Street applauds.

Hasta la vista , baby!

Arnold Schwarzenegger said it in “Terminator 2” this summer.

And now an Orange-based conglomerate that distributes some of Schwarzenegger’s movies on videocassette is repeating his famous send-off and aiming it at Hollywood.

Bergen Brunswig Corp. said Wednesday that it wants out of the movie business and is holding talks with a Nashville firm that wants to buy its home entertainment subsidiary, Commtron Corp.

Commtron, based in Des Moines, Iowa, is the nation’s largest videocassette distributor, selling scores of hit titles to rental shops and consumers.

Problem is, Bergen Brunswig, which acquired Commtron in 1982, wants to refocus on its core business: pharmaceuticals.

Bergen, one of Orange County’s largest companies, says that 90% of its revenues and the bulk of its profits already come from drug distribution.

Commtron only employs 30 people in Orange County, all at a Santa Ana distribution center.

Wall Street analysts reacted positively to the announcement.

“There will be a lot of people who will be happy,” said Peter Thornton, an analyst with Standard & Poor’s Corp., a New York-based debt-rating agency. “They should stick to what they do well.”

Bergen said it is negotiating to sell Commtron to Ingram Entertainment, already a large videocassette distributor. Ingram’s parent corporation also owns Ingram Micro, the world’s largest personal computer products distributor.

Commtron shareholders would receive $7.75 per share of common stock from Ingram. Bergen owns about 80% of Commtron; the rest of Commtron’s stock is traded on the American Stock Exchange. The total deal would be worth $78 million.

Bergen’s stock was up 62.5 cents Wednesday to close on the American Stock Exchange at $18.875.

Emphasizing that negotiations are continuing, Bergen’s chief financial officer, Neil F. Dimick, said he hopes to close a deal in two to three months.

One of the reasons Bergen analysts are applauding the tentative sale is that videocassette distribution has been in the doldrums.

For starters, studios are making fewer pictures.

Making matters worse, a consolidation among video rental shops has caused price wars among distributors.

“It’s become more competitive in dealing with companies like Blockbuster,” said John McRae, an analyst with the New York brokerage of Smith Barney, Harris Upham & Co. “The video retailers have exercised tremendous muscle in getting better deals from the video distributors.”

Video distributors such as Commtron are also being hurt by so-called sell-through videos, low-priced cassettes sold directly to the public. “Peter Pan,” “Pretty Woman” and “Home Alone” are a few recent examples.

“Mass merchants are getting into the business and selling those at a cut-rate basis,” said McRae. Chains like K mart “are selling videos at below cost just to bring traffic into the stores,” he said. The cut-rate pricing means more people purchase the tapes, cutting into sales to rental shops by distributors like Commtron.

Commtron’s Hottest 1991 Titles

RENTAL VIDEOS

1. Dances With Wolves

2. Ghost

3. Die Hard 2

4. Kindergarten Cop

5. Dick Tracy

6. The Hunt for Red October

7. Days of Thunder

8. Sleeping With the Enemy

9. Three Men and a Little Lady

10. GoodFellas

SELL-THROUGH VIDEOS *

1. The Jungle Book

2. Peter Pan

3. Home Alone

4. Pretty Woman

5. Robin Hood

6. Teenage Mutant Ninja Turtles--

The Movie

7. Teenage Mutant Ninja Turtles II

8. Duck Tales--The Movie

9. Total Recall

10. Jetsons--The Movie

*Sell-Through Videos are sold directly to consumers, generally for less than $30

Source: Commtron Corp.