SPELLING, KIRCH INK PACT

$300 mil library deal a sign Viacom not selling

NEW YORK – Spelling Entertainment signed a $300 million, 10-year licensing deal with the German TV giant Kirch Group, in a sign that Viacom Inc. is committed to keeping Spelling in the fold.

The deal, which follows a broader $1.8 billion deal struck between Kirch and Viacom’s Paramount Pictures, MTV and Nickleodeon cable networks last April, will also ensure a bump in Spelling’s fourth quarter 1996 profits. Spelling stock fell 25 cents to $7.37 Monday.

Viacom tried to sell its 75% stake in Spelling for almost a year before deciding last spring that the offers were not high enough. Since then, intermittent rumors that Viacom may try to sell the company again have plagued Spelling.

Investment bankers said Monday that by licensing Spelling’s library and new product to Kirch in Germany for the next decade, one of the main attractions of Spelling to potential buyers has been diminished.

“If you are trying to attract a foreign buyer, one of the things they will look at is, ‘Can I package this thing in my territory?’ ” a banker said.

The deal licenses Spelling’s library and new product to Kirch in German-language territory for free and pay TV, pay-per-view, and video-on-demand. It also gives Kirch TV rights covering continental Europe for new made-for-TV movies produced by Spelling.

Licensing out libraries has become common in Hollywood, of course, and the deal doesn’t rule out someone’s going after Spelling. But it does suggest Viacom chairman Sumner Redstone is not harboring any long-term plan to sell Spelling, because he would be unlikely to sign a deal which made Spelling less attractive to buyers if he were, bankers say.

Spelling is expected to take some of the proceeds from the deal in its 1996 fourth-quarter earnings, thereby giving the company a big bump in profits. In the fourth quarter of 1995, Spelling earned $7.7 million.

“We are delighted to expand our presence in the highly developed German market,” said Spelling vice chairman Aaron Spelling, who added that the deal was “indicative of the strategic opportunities of which Spelling Entertainment can avail itself through its majority ownership by Viacom.”

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