An article yesterday on the acquisition bid for MCA Inc. incorrectly identified MCA founder Jules Stein, rather than Jule Styne, as the songwriter whose credits include "Gypsy," "Gentlemen Prefer Blondes" and "Funny Girl." (Published 11/28/90)

Another piece of the American entertainment business passed to foreign ownership yesterday as Matsushita Electric Industrial Co. of Japan reached agreement on a $7.5 billion buyout of MCA Inc., the producer of movies, records and books and the owner of two huge theme parks.

Matsushita, a consumer-electronics concern that ranks as Japan's third-largest company, wrapped up details of its friendly takeover of the Los Angeles-based company early yesterday after an all-day bargaining session in New York. By paying $6.13 billion in cash, plus pledging stock and assuming debt valued at another $1.45 billion, Matsushita's buyout of MCA ranks as the largest ever by a Japanese concern of an American company, surpassing the $4.8 billion Sony Corp. paid last year to purchase another Hollywood studio, Columbia Pictures Entertainment Inc.

The buyout gives Matsushita -- best known as the marketer of Panasonic and Quasar audio and video products -- ownership of MCA's Universal Pictures studios along with Hollywood's largest library of movies and television programs, including such films as "E.T.: The Extraterrestrial," "Back to the Future," "The Sting" and "Out of Africa."

The deal would put Matsushita even with Sony, its arch rival, as the two companies vie to marry their skill manufacturing VCRs, laser-disc players and other electronic "hardware" with the music and video "software" that American companies have been most successful at creating for generations.

In a press conference yesterday at Matsushita's Osaka headquarters, the company's president, Akio Tanii, said Matsushita will let MCA management run the entertainment business as it sees fit, but he stopped short of providing an ironclad guarantee of the studio's creative independence.

Asked if he would object to a Universal film that adversely portrayed the Japanese, Tanii said, "I believe this acquisition will improve U.S.-Japan relations, so I don't think that a Japan-bashing movie would come out of MCA."

MCA President Sidney J. Sheinberg said his company agreed to the Matsushita offer because the Japanese company was able to provide the capital that MCA will need to compete against the handful of giants expected to dominate the entertainment business. Such capital would be difficult to obtain from an American firm, according to industry analyst Larry Gerbrandt of Paul Kagan Associates, because of tight lending conditions in the United States that make it virtually impossible for a U.S. company to consider such a sizable purchase.

David Geffen, the record and movie producer who is MCA's largest shareholder, said that because of Matsushita's "unlimited checkbook ... there is a lot we can do now that we couldn't do in the past." He said MCA has already begun talks with another global giant, Bertelsmann AG of Germany, about combining Bertelsmann's RCA and Arista record operations with MCA, whose artists include Elton John, Tom Petty and Tiffany.

If the purchase is approved by shareholders, MCA would become the fourth of the seven major studio owners to become foreign-owned. In addition to the two Japanese giants, Pathe Communications Corp. of Italy owns MGM-UA Communications Corp. and Rupert Murdoch's Australian-based News Corp. owns 20th Century-Fox. Walt Disney Pictures, Paramount Pictures and Warner Bros. are part of U.S. companies.

Reaction to the MCA buyout was swift in Washington, where policy makers have been watching the consolidation of the entertainment business with a mixture of interest and alarm. Matsushita's acquisition is expected to raise the heat on a number of simmering issues, including rules relating to the ownership of production companies by television networks and the control over a new generation of TV technology known as high-definition television (HDTV). {See accompanying article.}

To satisfy federal regulations prohibiting foreign investors from owning U.S. broadcast stations, Matsushita had to agree to transfer ownership of MCA's New York-area television station, WWOR, to MCA's existing shareholders. That stock was valued at $5 per share, or $464 million.

And in a bow to public-relations concerns, Matsushita said it will sell MCA's hotel and concession business in Yosemite National Park in California "to a qualified American buyer" within a year. Jim Ridenour, director of the National Park Service, had said during the MCA-Matsushita negotiations that he preferred the park operations be run by an American company.

"These are pretty hallowed places to us," said Ridenour yesterday. "I would feel more comfortable if operations were run by {a domestic company}. It may be more of a point of symbolism than anything else."

MCA was founded as Music Corporation of America in 1923 by the late Jules Stein, an eye doctor turned song writer whose credits include "Gypsy," "Gentlemen Prefer Blondes" and "Funny Girl." The company started largely as a talent agency that represented jazz musicians, including most of the big bands of the swing era, before taking on such movie stars as Joan Crawford and Ronald Reagan. The company was forced by the Justice Department to give up the talent agency in 1959 when it bought film pioneer Carl Laemmle's troubled Universal Pictures.

For the past 50 years, the company has been run by its current chairman, Lew Wasserman, a former movie usher who is frequently called the most powerful man in Hollywood and is a major contributor to liberal causes and candidates. It was Wasserman who prodded MCA into television production and opened the first of two Universal Studios amusement parks outside MCA's hilltop offices, part of the 420 acres of prime Los Angeles real estate owned by the company. With Sheinberg as its longtime president, MCA acquired an array of media and entertainment companies, such as Geffen's record company last year, G.P. Putnam's Sons publishing operation, and half interests in the USA cable network and Cineplex Odeon theater chain.

The sale to MCA will vault MCA's biggest shareholders into the ranks of America's richest. Geffen's 10 million shares are worth about $710 million, and Sheinberg's 1.3 million shares are valued at $92.3 million.

Wasserman, who owns 5 million shares directly, will receive preferred stock Matsushita values at $355 million in order to minimize tax consequences. Wasserman also has voting control over an additional 6 million shares held by family and charitable trusts, which will be sold to Matsushita for $426 million.

Gerbrandt said yesterday the $71-per-share price was well below industry estimates of MCA's value, which he placed at $89 per share, or $8.26 billion, not including MCA's debt.

But Sheinberg said, "You have to consider the environment in which the negotiations took place," suggesting that the soft economy hampered MCA in obtaining a higher price.

Staff writer Paul Blustein contributed to this story from Tokyo.



Columbia Pictures......Sony (Japan)

Universal Pictures.....Matsushita* (Japan)

20th Century Fox.......News Corp. (Australia)

MGM-UA.................Pathe Communications (Italy)

Warner Bros. ..........Time Warner (New York)

Walt Disney Pictures...Walt Disney Co. (Burbank, Calif.)

Paramount Pictures.....Paramount Communications (New York)

*Has made an offer but not completed deal.