Spelling Entertainment to Close Film Division, Parcel Out Projects

Spelling Entertainment Group plans to close its film unit, laying off six employees immediately and the remaining 14 as projects under development are farmed out to other studios to carry forward.

The company, which is 80%-owned by Viacom Inc. and 20% by the public, will take a charge associated with the closing of between $15 million and $20 million in the first quarter.

Since its failed attempt to sell Spelling two years ago, Viacom has been gradually paring the company down to its core television business in a move that some analysts believe is the prelude to a sale.

Spelling denies that it is on the block and contends that the moves are aimed at directing resources toward its booming TV business. Spelling and its Big Ticket Television arm produce such programs as “Melrose Place,” “Beverly Hills 90210,” “Sunset Beach” and “Moesha.”

Still, Viacom executives confirm that talks have resumed with potential buyers, including King World Productions Inc., which syndicates the “Oprah Winfrey Show,” “Wheel of Fortune” and “Jeopardy” and is producing a new talk show with Roseanne Arnold as well as a new version of “Hollywood Squares.”

King World denies that any serious talks have taken place.

Viacom, which purchased Spelling as part of its 1994 takeover of Blockbuster Entertainment, considers the unit redundant with its Paramount Television operation. Viacom was unable to sell Spelling because potential suitors considered the asking price of $1.4 billion too high.

But Viacom has since stopped direct-to-video film production by Spelling’s Republic Entertainment unit, which concentrates only on distribution of home videos for retail. Spelling has also announced plans to sell or spin off Virgin Interactive Entertainment, a producer of video games.

Spelling Films was formed in 1990 to drive international sales of a television library that includes a variety of Aaron Spelling shows such as “Love Boat.” Spelling Films has produced and acquired rights to 29 feature films, including “In & Out,” “Breakdown”--which it co-produced with its sister, Paramount Pictures--as well as “The Usual Suspects,” “The Player” and “Short Cuts.” Typically, Spelling distributed the films internationally and partnered with a major studio that retained domestic distribution rights.

The company said Mitch Horwitz, president of Spelling Films, will stay on until the films that are currently in development are parceled out and will oversee the shutdown.