Metromedia to Buy Goldwyn for $115 Million

The struggle over Samuel Goldwyn Co., one of Hollywood’s few remaining independent film distributors, ended Wednesday when billionaire John Kluge’s Metromedia International Group Inc. announced plans to acquire the company in a deal valued at $115 million.

Metromedia’s offer comes in two parts: $42.5 million in stock--$5 worth of Metromedia stock for each Goldwyn share--and the assumption of $72.5 million in bank debt that Goldwyn was under increasing pressure to pay. Metromedia gets a library of about 850 films and 700 TV episodes.

Metromedia’s bid tops a previous offer of $62 million in cash made for Goldwyn’s library of films and TV shows made by European entertainment conglomerate PolyGram. Earlier this week, PolyGram withdrew its bid in frustration after a Jan. 22 deadline to reach a definitive agreement was missed.

Goldwyn is best known as a distributor of “art house” films--smaller, more sophisticated movies usually produced and distributed outside of the traditional Hollywood studio system. Its past successes include “The Madness of King George,” “Much Ado About Nothing” and “sex, lies and videotape.” Goldwyn’s latest release is “Angels & Insects,” which premiered strongly over the weekend in New York.

Goldwyn’s library of TV shows includes “American Gladiators” and the old “Flipper” series. It also owns the Landmark chain of theaters, which includes such classic Southern California movie houses as the Rialto in South Pasadena, the Nuart in West Los Angeles and the Port in Corona del Mar.

The deal was welcome news for Goldwyn stockholders, who have been nervously watching the company slip over the last year, posting a loss of $20 million in the fiscal year ended March 31.

Burdened by a high debt load, Goldwyn fell on hard times with a string of films that performed poorly at the box office, notably “The Perez Family.” The company’s lenders--Bank of America, Britain’s National Westminster Bank and Japan’s Yasuda Trust & Banking--have been turning up the pressure.

The acquisition is another move by Kluge in reviving his entertainment operations, which for a period were nearly dormant while his Orion Pictures unit was in bankruptcy proceedings. Metromedia previously agreed to buy Motion Picture Corp. of America, producers of the hit film “Dumb and Dumber.”

Metromedia Vice Chairman Stuart Subotnick said Goldwyn Chairman Samuel Goldwyn Jr.--son of the legendary Hollywood mogul--and President Meyer Gottlieb would remain at the company, and said Metromedia plans to keep the theaters.

Kluge currently controls about a third of Metromedia, which will be diluted to less than 30% by the Goldwyn deal.

Under terms of the deal, Goldwyn stockholders will get the $5 a share in Metromedia stock if Metromedia’s stock trades between $12.50 and $16.50 a share for 20 days ending five days before the acquisition is final. The amount will be adjusted if the stock trades higher or lower at the time the deal closes.

Separately, directors of Metromedia and Alliance Entertainment Corp. announced they have approved a previously announced acquisition of Alliance by Metromedia for $533 million in stock. Alliance distributes recorded music and is based in New York.

Goldwyn shares rose 62.5 cents to $4.75 on the American Stock Exchange. Metromedia rose 50 cents to $12.75 on the Amex.