After months of speculation, billionaire Ronald Perelman’s New World Communications Group March 23 confirmed that it has signed an agreement in principle to acquire Stephen J. Cannell’s production company for $30 million in convertible securities.
The acquisition, which will include a long-term pact giving New World distribution rights to all of Cannell’s TV shows, is part of Perelman’s “vision for New World to be a major player in all games,” New World Entertainment chairman Brandon Tartikoff said in an interview.
The deal will instantly turn New World, which has been out of the primetime business for the past few years, “into a major force – if not the major force – in dramatic TV” and the firstrun hour business, Tartikoff said.
It will also allow New World to shore up its casting, production and post-production operations, which Tartikoff described as currently a “shell” of an operation.
And Tartikoff said there is a “very distinct possibility” that New World will call on Cannell to expand his firstrun efforts from primetime into other dayparts.
That would include latenight, where New World has a commitment to develop a series for the Fox stations under a $500 million affiliation and programming deal struck last year.
Although the merger had been anticipated, jittery employees at Cannell are waiting to hear their fate as details are sorted out over the next few months.
Cannell’s syndication operation will fold into New World-owned Genesis Entertainment, but the future of Cannell’s lean distribution staff, including president Pat Kenney, has yet to be decided.
While there will be some areas of duplication, Cannell said New World “doesn’t want to buy a machine and break it up.” Cannell will continue as president of Cannell Entertainment, which is slated to become a division of New World Communications. He said he would report to the company’s upper management, including Tartikoff, who has had a long association with the producer from his NBC days and was a key factor in attracting him to New World.
Cannell, who has already spun off his TV station holdings, put his 16-year-old production company on the sales block nearly a year ago. The new partners have been in serious discussions since early December.
Negotiations were “very complicated” since they involved both the personal and corporate finances of Cannell’s privately held company, a New World spokesman said.
The agreement does not include the Cannell Studios in Vancouver or his program library, which includes “The A-Team” and “The Rockford Files.” Cannell said the library constitutes a large piece of his operation.
The length of New World’s distribution agreement with Cannell, which covers all his shows through the 1994-95 season, will depend on how much the programs generate in broadcast and cable license fees, according to the producer.
Analysts have valued Cannell’s entire empire at between $50 million and $100 million.
In his first public statement concerning the sale, Cannell said he was seeking to strengthen his company, one of the last independent TV operations left in Hollywood.