Great American sells ‘E.T.’ stake to Par, Cox

Paramount Domestic Television and Cox Broadcasting have completed a buyout of financially troubled Great American Broadcasting’s stake in “Entertainment Tonight.”

The deal, which is believed to be based on estimated profits over the next several years, could be worth at least $ 40 million for the broadcasting subsid of cash-strapped Great American Communications Co.

GACC, which acquired its interest in the cash cow “E.T.” after buying one of the original partners, Taft Broadcasting, apparently sought an advance to help it pare down its huge debt burden.

As previously reported (Daily Variety, Aug. 11), GACC is seeking to work out a restructuring plan with its major creditors. Without the restructuring, the company has said it would be unable to support principal and interest payments due this month and in the first quarter of 1993.

Paramount, the managing partner of the top-rated syndie magazine show, is known to want complete ownership of the 12-year-old series, despite a cordial working relationship with the partners.

Under the agreement with Great American, the studio has effectively reduced the number of oversight participants on “E.T.” from four to two, with Cox losing one of its two votes.

Cox had more votes than either Par or GACC because of the principal role played by Al Masini, chairman-CEO of Cox subsids TeleRep and Television Program Enterprises, in the creation of the highly successful magazine strip.

With GACC out of the picture, Par (overseeing production and station sales of the show) and Cox (controlling the barter and cash sales via TeleRep) will have one vote each over the program’s purse strings.

Despite its withdrawal, GACC is expected to continue airing “E.T.” on its TV stations.

Analysts and syndication community sources varied widely in their estimates of Great American Broadcasting’s take from the sale of its interest in “E.T.”

The program reportedly generates about $ 47 million a year in pretax earnings–the difference between its $ 78 million in barter and cash license fees and the $ 31 million in annual production costs.

Because of distribution fees, Par is believed to capture about 40% of those pretax profits while Cox and Great American each claim 30%.

Under such a scenario, the broadcasters would each reap $ 14.1 million a year and Par would take in $ 18.8 million.

Entertainment industry analysts suggested that cash-rich Paramount would be unlikely to pay Great American more than three years’ worth ofprofits, especially with interest rates so low and the uncertainty of the syndication marketplace.

Syndicators, however, were more generous in their assumptions.

One noted that it would not be impossible for Great American to receive 10 times its annual share of pretax profits, given “E.T.’s” staying power.

The $ 140 million-plus generated by such a sale would go a long way toward alleviating GACC’s debt and pressures from near-term maturities.

A source close to Par said Great American and the other parties walked away from the deal satisfied with the outcome.

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