In a surprise move, Pinelands Inc. said Thursday that it had terminated a deal to buy KCAL-TV in Los Angeles from Walt Disney Co. in exchange for Disney acquiring a 45% stake in Pinelands.
Instead, Pinelands, owner of WWOR-TV in New York, said it had agreed to be acquired by BHC Communications Inc. for $18 a share, or about $310 million.
The deal, although considerably sweeter than what Disney had offered when it agreed to invest in Pinelands last March, is still $77 million less than WWOR-TV was sold for in 1987, reflecting how much values for TV stations have fallen in the economic slump.
The previous deal with Disney had come under fire from some investors, particularly New York-based money manager Mario Gabelli, who protested that the offer was seriously undervalued. Gabelli controls about 12% of Pinelands' stock.
Disney will now remain sole owner of KCAL-TV/Channel 9. A Disney spokesman said the company was "evaluating the situation" regarding the rival BHC bid. The Disney offer was valued at about $200 million for the 45% stake in Pinelands.
Larry Fraiberg, chief executive of Pinelands, said the company wanted to "maximize shareholder value. We believe that this transaction fits that criteria."
BHC Communications operates seven TV stations and, through interlocking ownership interests with Chris-Craft Industries, also owns KCOP-TV/Channel 13 in Los Angeles. Both companies are controlled by New York investor Herbert J. Siegel.
After the transaction, BHC/Chris-Craft will be one of the largest television station groups in the country, reaching about 18% of all TV households in the United States.
That kind of national coverage will make BHC/Chris-Craft a coveted partner in the launching of new first-run syndicated TV shows, and could serve as a valuable base for any effort at creating a new network.
Pinelands was created when it was spun off from MCA after the Hollywood studio was acquired by Matsushita Electrical Industrial Co. in late 1990. Foreign-owned companies are prohibited from controlling American TV stations.