Spelling May Be Hollywood’s Next Big Takeover Deal : Producer to Hire Bankers to Explore Buyout Inquiries

Hollywood’s frantic takeover deal making continued without pause Friday as the major TV production house Spelling Entertainment disclosed that it is mulling several buyout inquiries.

Spelling, the prolific producer of “Charlie’s Angels,” “The Love Boat” and more, said its board has voted to hire two investment banks to “explore various strategic alternatives . . . including the possible sale of the company.” In a prepared statement, Chairman and Chief Executive Aaron Spelling said the company planned a “full exploration of opportunities . . . particularly in light of recent expressions of interest.”

Ronald Lightstone, executive vice president of the concern, declined to disclose who the interested parties are or how recently their takeover feelers have come. The Drexel Burnham Lambert and Merrill Lynch bankers “will start trying to sort things out, and before too long I’m sure we’ll have some answers,” he said.

The announcement came in a week when Sony Corp. has shaken Hollywood by announcing a $3.4-billion offer for Columbia Pictures Entertainment, and a $200-million offer for Guber-Peters Entertainment, whose executives Sony wants to manage Columbia.

“Once this deal making starts getting up a little momentum, everybody suddenly feels they’ve got to have a deal,” said Lee S. Isgur, entertainment industry analyst with the Paine Webber brokerage in New York.

Spelling asked the American Stock Exchange to halt trading of its shares Friday morning, then made its announcement just before the close of the market. Spelling stock slipped 25 cents to $8.25, on volume of 5,100 shares.

Huge Library of Reruns

Analysts said the feelers could have come from any of the dozens of domestic and foreign companies that recently have seen new value in television libraries and production because of growing TV viewership.

“It could be any of 12 Japanese companies, 10 Europeans or 8 American firms,” said Lisbeth Barron, analyst with McKinley Allsopp Securities, an investment firm in New York.

Analysts said a key attraction in the company is its huge library of reruns. But they differed on how much interest an auction of Spelling would elicit.

Jeffrey Logsdon, analyst with the Crowell, Weedon & Co. brokerage in Los Angeles, said that Spelling’s stock had been “highly undervalued” by investors and that the company could fetch $15 to $18 a share. Because of its production and distribution strength, buying Spelling is “probably the lowest-cost way to become a major player in the TV production and distribution business,” Logsdon said.

But Paine Webber’s Isgur said Spelling has had “a pretty lousy record recently,” noting the absence of first-run network shows this fall. “This isn’t a done deal yet,” he said.

The company might be of greater interest to buyers if its libraries included more half-hour comedy series rather than so many full hour dramatic series, which are less valuable in reruns, analysts said.

Spelling, fabled for its ability to wring profits from television series, has recently undergone a series of major changes. Last year, Aaron Spelling ceded his control of the firm, selling a 49% stake to Great American Communications, a concern controlled by financier Carl H. Lindner.

Spelling Entertainment’s stock price and profitability has slumped because the company has no first-run series on network television, although series, television movies and miniseries are in the works. Spelling’s stock sold at $14 a share when it went public in 1986, slid to $4.50 in the October, 1987, stock market crash and has partially recovered since then.

Since 1986, Aaron Spelling has been joined in the management suite by three former executives of Viacom International, the big television production and distribution company. Jules Haimovitz is now president and chief operating officer, John Brady is chief financial officer and senior vice president and Lightstone is executive vice president.

Last March, Spelling moved into TV distribution as it merged with Lindner’s Worldvision Enterprises. And it added an additional TV production unit with the acquisition in March of Laurel Entertainment.

Four major shareholders in Spelling control about 88% of its shares. In addition to Lindner’s 49% block, Aaron Spelling holds a 32% stake, Vice Chairman Douglas Cramer holds 5% and E. Duke Vincent, a producer and longtime Spelling associate, controls more than 2%, according to Lightstone.

In a statement late Friday afternoon, Lindner’s Great American said it supported the Spelling board in its exploration of options, including the possible sale of the company.