PolyGram to Seek Library of Goldwyn : Hollywood: Sources say the Dutch firm will pay $62 million and get 850 movie titles.

Dutch-owned PolyGram Filmed Entertainment is expected to announce today that it has agreed to buy the film and television library of financially ailing Samuel Goldwyn Co., according to sources close to the negotiation.

Sources say PolyGram--which has longed to be a major Hollywood player since it founded its film division in 1992--will pay $62 million in cash for about 850 movie titles, including “The Madness of King George,” “Much Ado About Nothing,” “Eat, Drink, Man, Woman” and “sex, lies and videotape,” as well as 700 TV episodes, the most valuable of which are the original “Flipper” and “Gentle Ben” series and “American Gladiators.”

As part of the deal, PolyGram would also get an extended 20-year license to 75 movie titles from producer Samuel Goldwyn Sr.’s estate, which includes such classics as “Wuthering Heights.” PolyGram would not own the copyrights because that portion of the library is owned by the family trust and had been licensed to Samuel Goldwyn Co.

The proposed acquisition is a key move for PolyGram, which is seeking additional works to feed the worldwide distribution network it is building. A strong library provides cash flow to smooth earnings from PolyGram’s movie-producing assets, which include Interscope Communications, Island Pictures, Propaganda Films and Working Title.

PolyGram Filmed Entertainment President and Chief Executive Michael Kuhn, who was not available for comment late Tuesday, has said he hopes the company will have a full-fledged domestic distribution operation in place in 1997. PolyGram already has international distribution operations in Britain, France, Benelux, Spain, Australia and New Zealand, and expects to be set up in half of the key overseas territories, including Germany, by the end of next year.

PolyGram’s deal with Goldwyn does not include any of the company’s other assets, including its production, distribution or foreign sales units, its personnel or its 150-screen Landmark Theatres art house chain, which has an annual operating profit of about $5 million and has been valued by some at more than $50 million.

Samuel Goldwyn Jr., the 70-year-old son of the legendary mogul who owns about 64% of the 16-year-old company, and President Meyer Gottlieb, also a shareholder, could not be reached for comment. They could sell the theater assets separately and secure themselves a production deal somewhere, or pay down the company’s $70 million or so in debt and try to restructure the existing operation.

Although sources say PolyGram has a deal in principle with the publicly held Goldwyn, finalization of the agreement is subject to shareholder and regulatory approval. One source said the deal could take several months to close. The supervisory board of PolyGram’s parent company, London-based PolyGram, has already approved the deal.

Like many other independent movie companies that have been forced to sell part or all of their assets, Goldwyn has been struggling under heavy bank debt to stay afloat in an increasingly capital-intensive business. In June, the company disclosed that unless it could secure new financing, it might “not have sufficient liquidity to meet repayments” of its bank loans.

Ted Turner had been in talks to acquire all of Goldwyn’s assets until Time Warner Inc. agreed to buy his company for $7.4 billion.

Although PolyGram, which is 75%-owned by Philips Electronics, has been a global force in the music business for many years, it has built its movie business at a slow, conservative pace. The company has been regarded as a potential bidder whenever a studio has come up for sale recently.

Goldwyn shares slipped 12.5 cents to $3.875 on the American Stock Exchange. The stock traded as high as $9.75 this year and as low as $3.

On the New York Stock Exchange, PolyGram was down $5 to $50.375 after announcing that profit for 1995 would be flat compared with 1994. PolyGram said its results had been hit by a weaker-than-normal performance by its pop music business in the second half of the year, including delays in the delivery of some albums.