Speculation is growing that Walt Disney Co.’s hunt for additional studio space could propel it into a takeover of MTM Entertainment, the troubled U.S. producer owned by Britain’s TVS Entertainment.
However, reports in Hollywood that Disney is negotiating to buy either the whole of MTM (including its library and production company) or just its studio real estate have met with mixed reactions from U.K. investors.
“As far as one knows, everybody who has looked at MTM over the past 12 months has found nothing there worth buying,” said Hamish Dickson of securities firm Hoare Govett. “It seems to have been offered around most of Hollywood.”
“It’s got enough of a ring of plausibility not to be dismissed,” countered Jane Anscombe of Barclays de Zoete Wedd, who observed that this was probably not the best time for TVS to sell MTM in view of the perilous state of the U.S. syndication market.
Rumors that MTM is back on the sales block have spread since Christmas when Rudolph Agnew, former CEO of international mining group Consolidated Gold, joined TVS as exec chairman. He replaced group chief exec James Gatward, who remains head of TVS’ U.K. tv interests and MTM.
Official word from TVS is that “no decision” has been made on the fate of MTM. Earlier, a TVS spokesman said it was “too simplistic” to say the whole of MTM was up for sale; options included the separate sale of the studio and/or library and production company.
TVS, commercial broadcaster for the south of England, paid $320 million for MTM in 1988. However, some analysts doubt the L.A. producer will fetch more than $100 million in today’s market. As underscored in its recent aborted purchase of Jim Henson Prods., Disney proceeds ony if all the terms are right.
Chris Akers, analyst with Citi-corp Scrimgeours, said there was a feeling that MTM (producer of “Hill Street Blues”) had turned a corner in the past few months. MTM reported a £ 700,000 (about $1.35 million) profit in the first six months of 1990, following a loss of £ 8.9 million ($17 million) for the last nine months of the previous year.
Akers also speculated that Disney could be looking to diversify its tv production and syndication operation away from straight kidvid and family fare, using the MTM catalog and existing production facilities as a springboard.
Disney profits decline
Separately, the recession clipped Walt Disney’s theme park business for the first-quarter, as the company posted its first decline in profits in six years. Net profits dropped 2% to $170.44 million from $174.41 million in the same period last year. But the per-share profits hit a record $1.28 a share, up 2 ¢s; from $1.26 a share because Disney bought back stock.
For the first time since Disneyland opened, Disney’s filmed entertainment sector surpassed its theme park business by posting increases in both operating income and revenue for the period ended Dec. 31, per company officials.
Disney’s outstanding common shares shrank by 5,920,000 to 132,958,000. Still, the company posted record revenue of $1.49 billion, up 16% from $1.29 billion.