Broadcasting’s Creators of a New World : Perelman, Bevins Credited With Transforming the TV Station Operator
With two bold and quick moves, billionaire Ronald O. Perelman has pushed his 54%-owned New World Communications Group Inc. from relative obscurity to the attention of Wall Street. An alignment with Fox and the recruitment of programming whiz Brandon Tartikoff have added sizzle to the stock, which jumped this week to a high of $14.175--up 50% from its price a month ago.
New World Communications was organized just seven months ago, with the merger of Perelman’s modest TV programming assets and seven TV stations acquired in 1993. Until late May, the company was perceived as a station operator, with its stock trading at about nine times its cash flow--typical of broadcast stocks. But Tartikoff’s hiring called attention to New World’s potential as a TV programmer--boosting its price to the higher multiples typical of program suppliers.
Hollywood and Wall Street executives are intrigued by the skilled transformation of some debt-ridden TV stations and rag-tag TV libraries into the framework of a vertically integrated entertainment company. The credit, they say, belongs to Perelman, 50, and William C. Bevins, New World’s low-profile chief executive who hammered out the deals.
“They certainly seem to be putting the right pieces together,” said Jessica Reif, a securities analyst with Oppenheimer & Co.
Perelman gained fame with his hostile takeover of Revlon in the 1980s, but he has prospered from a number of acquisitions in Hollywood--including Technicolor and Marvel Entertainment Group. He is also known in Los Angeles as the multimillion-dollar backer of the annual “Fire & Ice” ball, which was founded by Tartikoff’s wife, Lilly, to raise money for women’s cancer research at UCLA.
Bevins, 48, spent most of the 1980s negotiating deals for Ted Turner before joining Perelman in 1988, just as Perelman sold Technicolor for $780 million. In early 1989, Bevins helped negotiate Perelman’s $82.5-million purchase of Marvel from the faltering New World Entertainment, and a few months later, Perelman agreed to acquire the bulk of New World for $141 million.
Bevins admits to a rocky start. He overestimated New World’s chances of profiting from the prime-time programming business and was forced to refocus on production for the international market.
Bevins discovered he needed a domestic sales force to distribute his programs in the United States and ultimately paid $30 million for Genesis Entertainment. But the big move came last year when Perelman decided to spend $100 million for a 54% stake in the former Storer station group, which was mired in a bankruptcy proceeding. The move was gutsy, according to one investment banker, because it also meant assuming more than $550 million in station debt.
“The first four years were not a lot of fun,” Bevins said this week.
Now, with the $500-million investment from Fox and the charismatic Tartikoff on board as production chief, he says, “We have all the pieces in place, as far as the television business goes.”
Bevins said the company has already budgeted about $100 million for TV production this year and will easily double that amount in the next fiscal year with the addition of Tartikoff’s Moving Target Productions and other projects.
By his own admission, Bevins reads no TV scripts and harbors no interest in expanding into feature film production. The native of Kingsport, Tenn., is an accountant by training who joined Turner Broadcasting System in 1979. There, Bevins’ work ethic became legend, as he toiled on Turner’s frustrated bid for CBS, then its $1.2-billion acquisition of the MGM library, which precipitated a $576-million bailout of Turner by a group of cable operators. While still in his 30s, Bevins suffered the first of two heart attacks.
When Bevins quit in 1987, Turner assigned two executives to take his place and asked him to stay on as a director. Former Turner colleague Robert J. Wussler describes Bevins as an executive who doesn’t waver once he has settled on a strategy.
“He doesn’t let small things get in the way,” Wussler said. “He doesn’t involve a lot of people; he works close to the vest.”
Bevins said he has better control of his schedule now, but he has suffered one more heart attack since joining Perelman and underwent quintuple bypass surgery last winter.
Within days of his hospital release, Bevins appeared in his office to continue working on a deal, recalled entertainment attorney Ken Ziffren, who represented Tartikoff in the latest transaction with New World.
On the deal front, in addition to its seven TV stations, New World has a pending $350-million agreement to acquire four stations from Great American Communications Inc. and has an option to acquire Argyle Television Holdings’ four stations for $716 million (including debt).
New World has marked five TV stations for sale to bring its ownership below the federal limit of 12: KNSD-TV in San Diego; WSBK-TV in Boston; WGHP-TV in Greensboro-High Point-Winston Salem, N.C., and two Birmingham, Ala., stations: WBRC-TV and WVTM-TV.
Financing isn’t an issue, thanks to the deal Bevins struck with News Corp. Chairman Rupert Murdoch, switching 12 New World-owned stations to Fox affiliates. Earlier in the year, New World raised $205 million from a rights offering and negotiated a $300-million credit facility with a group of banks for the purchase of TV stations. The company has additional borrowing capacity of $70 million to finance its TV production.