King World’s Shares Surge on Sale Rumors

Shares of King World Productions Inc. rose 14% on Wednesday after a report that the No. 1 TV show syndicator is in talks with possible buyers, including CBS Corp. and Fox Entertainment Group Inc.

King World, which distributes “Jeopardy!” “Wheel of Fortune” and “The Oprah Winfrey Show,” needs to expand beyond distribution because the station groups that buy its programming, such as Fox, NBC, ABC and CBS are looking to supply more of their own shows, reducing the time slots available to independents. The company especially needs to prepare for life without Oprah Winfrey, whose contract expires in two years and whose show accounted for about 40% of its first-quarter revenue.

King World has only recently had some success with creating its own programs, with “Hollywood Squares” on CBS showing some promise.

The company’s shares rose $3.31 to close at $27.75 in heavy trading on the New York Stock Exchange.

The talks, reported in Wednesday’s online edition of Broadcasting & Cable based on unnamed sources, comes less than a month after King World hired former Universal Studios head Frank Biondi Jr. as an advisor.

While Wall Street has been focused on a purchase by King World as a way to put its more than $1 billion in cash to better use, sources say a sale is more likely. Yet some sources are skeptical because of the company’s inability to do either in the past.

PaineWebber analyst Christopher Dixon said the company would fetch more than $40 a share, or about $3 billion, with cash and contractual obligations worth about $30 a share.