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TV Firm May Be Worth Up to $2 Billion : Group Seeks Control, Liquidation of Storer

March 20, 1985|BRUCE KEPPEL | Times Staff Writer

A group of investors said Tuesday that it will seek control of Storer Communications Corp. in order to liquidate the Miami-based cable-television operator and owner of seven television stations.

The group, calling itself the Committee for Full Value of Storer Communications Inc., said that Storer's shares are undervalued by the stock market and that shareholders could receive more if the company's assets were sold and the proceeds distributed.

It was the second major takeover development in the broadcast industry in as many days. On Monday, American Broadcasting Cos. agreed to be acquired by Capital Cities Communications Inc., a much smaller broadcast and publishing firm, in a deal worth $3.5 billion. Some analysts have linked the recent strong interest in broadcast companies to the Federal Communications Commission's decision early this year to permit a single company to own more television and radio stations.

The Storer group was formed by investors Keith R. Gollust, Paul E. Tierney Jr. and Augustus K. Oliver of the New York investment firm of Coniston Partners.

The committee said in a statement announcing its formation that it intends to seek election of its own slate of directors at Storer's annual meeting May 7. If successful, the new board would then "immediately implement a program to sell all Storer's assets and distribute the net proceeds to the company's stockholders."

In an interview, Tierney said the investors' purpose is "very straightforward--to elect a slate of 10 directors and liquidate the company."

"We consider the liquidation value (of Storer) to be substantially above the market value," Tierney explained. Some Wall Street analysts, he said, have placed the liquidation value of Storer between $96 and $117 a share--about $1.5 billion to $2 billion.

On the New York Stock Exchange, Storer shares jumped $5.75 each to close at $70.125 Tuesday. That is more than double their 52-week low of $31.25.

The investor group claims to own 867,400 shares, or 5.29%, of Storer's 16.4 million outstanding common shares. Its nominees to the board own a total of 29,400 additional shares, it said.

John Bonner, a spokesman for Storer, said the company had no immediate comment on the proposal.

Storer owns seven television stations--including WAGA in Atlanta, WSBK in Boston, WJKW in Cleveland, WJBK in Detroit, WITI in Milwaukee, KCST in San Diego and WTVG in Toledo, Ohio--and operates cable-TV systems in 18 states.

The group also filed notice of its proposal with the Federal Communications Commission in Washington, which licenses broadcasting. James C. McKinney, chief of the FCC's mass media bureau, told the Associated Press that the group had informed him that it would "prefer to sell the properties station by station" rather than as a package.

The committee's membership comprises "six investment entities" that are either controlled by Gollust, Tierney and Oliver or maintain an advisory relationship with them, the group said in a statement.

Mario Gabelli, president of Gabelli & Co., a New York brokerage fipm that owns 400,00 shares in Storer, expressed outrage at the group's announced intent, calling them "charlatans posing as investors."

"We think Storer has done a superb job of focusing its energies and surfacing the values of the company," he said in an interview. "Storer's value to shareholders will be better realized by management's defrocking this group."

The committee's nominees, in addition to Gollust, Tierney and Oliver, include J. Peter Grace III, the son of W. R. Grace & Co. Chairman J. Peter Grace II; F. Philip Handy; Henry Sears Lodge; Gregory T. Mutz; Eben W. Pyne; David Strassler, and Charles C. Tillinghast, who retired as chairman of Trans World Airlines in 1976.

The group also retained Donaldson, Lufkin & Jenrette Securities Corp. to advise it and Skadden, Arps, Slate, Meagher & Flom as special counsel. Proxies will be solicited by the Carter Organization Inc.

Storer is the nation's fifth-largest cable-TV operator, but its cable operations, while generating 63% of the company's revenue, account for just 4% of profits. In contrast, the company's seven television stations produce the remaining 37% of revenue and 96% of profits.

The company reported $536.8 million in revenue last year, up from $458.9 million, but had a net loss of $16.7 million, less than half of 1983's loss of $39.7 million.


The company has cable television systems in 18 states and owns and operates five VHF and two UHF television stations. Storer is the nation's fifth largest multiple cable system operator.

In millions 1984 1983 1982 1981 1980 Revenues $536 $459 $379 $276 $197 Net income (16.7) (39.7) 9.2 31.9 24.8 (loss)

TELEVISION STATIONS WJBK..............Detroit WJKW............Cleveland WITI............Milwaukee WAGA..............Atlanta WTVG...............Toledo WSBK...............Boston KCST............San Diego

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