Producers Norman Lear and Jerry Perenchio launched a $453 million hostile-takeover bid yesterday for The Evening News Association, the Detroit-based media company that owns WDVM-TV, Washington's Channel 9, The Detroit News and other media properties.
The $1,000-a-share cash tender offer for all of the Evening News Association's shares came after some family members who control stock in the closely held company indicated they want to sell out.
Wall Street sources said yesterday they expect other bids for the company, including an offer from Rosslyn-based Gannett Co. Inc., which last week confirmed that it wants to make a major media acquisition. Gannett refused to comment on reports the company is preparing a bid.
Peter B. Clark, chairman and president of Evening News, issued a terse statement rejecting all offers. "The Evening News Association is not for sale," he said. "We will vigorously oppose any takeover attempt and we expect to succeed." Clark is the great-grandson of Evening News founder James E. Scripps.
Wall Street sources said that despite Clark's apparent opposition to selling the company, Evening News is up for grabs.
"I don't think there is any question that the company is going to be sold," said Porter Bibb, a managing director of Ladenburg, Thalman & Co., an investment-banking firm. "It is a question of the process and the price." Bibb is representing a group of dissident shareholders who want to cash in their investments.
In addition to WDVM-TV, the local CBS affiliate, Evening News owns network television stations in Tucson; Austin, Tex.; Oklahoma City and Mobile, Ala., and radio stations WWJ-AM and WJOI-FM in Detroit. Evening News' other properties include a chain of small daily and weekly newspapers in California and New Jersey, and a commercial printing operation in New Jersey.
The company's flagship newspaper, The Detroit News, has daily circulation of about 667,000 and Sunday circulation of about 885,000, giving it a 20,000-paper daily edge and 100,000-paper Sunday advantage over the rival Detroit Free Press.
The tough competition in Detroit has been costly for both newspapers and their parent companies. The Free Press is owned by Knight-Ridder Newspapers Inc. Neither newspaper has been profitable recently, but should one paper fold, the surviving publication could be immensely profitable as a monopoly newspaper.
Lear and Perenchio's cash bid of $453 million came less than two weeks after they announced the sale of two companies they controlled, Embassy Communications and Tandem Productions, to Coca-Cola Co. for stock and cash worth $485 million. In addition to television and movie production, the companies have rich libraries of shows that have been profitable in syndication, including "All in the Family" and "The Jeffersons."
Until recently, a hostile cash takeover bid for a broadcasting company was not considered to be practical, because of lengthy delays in obtaining Federal Communications Commission approval to transfer the licenses. But when the FCC gave Washington Redskins owner Jack Kent Cooke interim approval to make a hostile takeover bid for Multimedia Inc. earlier this month, it outlined a special procedure that bidders could use to avoid delays. That precedent is expected to lead to an increase in hostile-takeover bids in the industry.
Lear and Perenchio are seeking to use the same FCC procedure followed in the Cooke case, which involves the use of a trustee to hold shares prior to final FCC approval. They named former Treasury secretary G. William Miller, now an investment banker, as their trustee. The tender offer, which expires on Aug. 23, is conditioned upon FCC approval of the trustee arrangement, which is expected.
The most attractive property owned by Evening News is WDVM-TV here, which some Wall Street sources believe may be worth $300 million. A successful bidder for the company who is mostly interested in Channel 9 might be able to sell off the other properties and retain the lucrative television station for a bargain price. But if a bidding war develops, media giants including CBS Inc., which sources said would like to own its Washington affiliate, could get involved, driving up the price.
Any successful bidder will have to overcome several obstacles, including a Michigan law that makes hostile takeover bids difficult to complete. Lear and Perenchio filed a lawsuit in Detroit yesterday seking to enjoin use of the antitakeover statute.
Evening News has about 300 shareholders, but only recently began to give them printed financial information. The operations produced revenue of $310 million and net income of $13 million last year, which analysts said is very weak compared with others in the industry.
Media analyst Paul Kagan, who owns shares in the company, claims Evening News is worth more than $2,100 a share. Earlier this year, the company repurchased about 5 percent of its stock for $250 a share. The thinly traded shares changed hands for $800 a share in one recent transaction prior to yesterday's announcement.