Orion to Be Folded Into Global Media Concern : Entertainment: Billionaire John Kluge’s expanded Metromedia International would be formed via a four-way stock swap worth $1 billion.
Billionaire John Kluge is folding his ailing Orion Pictures and two other media companies into Atlanta-based holding company Actava Group to create a global media, entertainment and telecommunications company.
The new company, Metromedia International, is being put together via a complicated four-way stock swap worth about $1 billion and positions Kluge to again be a major force in media and entertainment.
Being combined are Orion, Actava, TV and movie company MCEG Sterling and Kluge’s existing Metromedia International, which until now has been a radio, cable and cellular company in Eastern Europe and Russia. Kluge controls Orion and Metromedia but has had no stake in MCEG, which has an interest in television’s “Homicide” and “McKenna” and produced such films as the “Look Who’s Talking” series.
Kluge will head the company as chairman and control it. He is relying on longtime associate and Actava Chief Executive John Phillips to implement the plan as president. In addition, Kluge aide Stuart Subotnick will serve as vice chairman.
The highest-profile company in the group is Orion, once known as one of Hollywood’s top independents. Founded in 1978, Orion peaked in the early 1990s with two Academy Award-winning hit films, “Dances With Wolves” and “Silence of the Lambs.”
But it also was a shambles financially, and its problems led Kluge to put the studio into bankruptcy proceedings in late 1991. He ended up putting some $200 million into the company before it emerged less than a year later.
Orion’s annual revenue reached $468 million in 1989. In its last fiscal year ended Feb. 28, the company’s revenue was only $175.5 million. Orion is expected to get funds that could jump-start its movie-making operation.
Kluge told reporters that he wants to make Orion a “top-tier” studio. Hollywood executives said they would welcome a healthy Orion, since it would create yet another buyer for films and talent.
Skeptics said Kluge appears to be repackaging of some of his assets, and they noted that Orion, now run by veteran video and appliance executive Len White, has been promising to get back into the production business.
Others said the link with MCEG--led by respected entertainment executive John Hyde--gives credibility to the operation and that Actava has about $250 million in cash, some of which Orion could put to use bolstering its operations. Hyde and other MCEG executives are expected to have major roles at Orion.
For Kluge, 79, the transaction means he again heads a large media company.
Actava rose 37.5 cents to $13.50 a share on the New York Stock Exchange; Orion surged $2.56 to $6.125 on Nasdaq.
Bloomberg Business News contributed to this report.