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King World Spins 'Wheel' Into a TV Forture : One of Hottest Syndication Firms

October 13, 1985|NANCY RIVERA | Times Staff Writer

Michael King isn't kidding when he declares that King World Productions, which until a few years ago was best known as the TV syndicator of the ancient "Little Rascals" movie shorts, aims to be "the most important supplier to television stations in every time period. We would like to be the ultimate distributor in the world."

This is the same company that King, at the age of 25, operated out of a brother's kitchen in 1973 after the death of his father, Charles, who founded King World nearly 20 years before.

This is the same company that two years ago had a mere 15 employees--and six of them were Kings.

But this same company is now one of the hottest firms in the $1-billion television syndication business. King World employs more than 70 people, has moved its headquarters to New York from Summit, N.J., and has added offices in Beverly Hills, Chicago, Nashville and Toronto.

At the hub of that success is "Wheel of Fortune," a wildly popular game show produced by Merv Griffin Enterprises and distributed by King World. Since September, 1983, King World has spun the top-rated night-time "Wheel," which also has aired during the day on NBC since January, 1975, to produce a fortune of its own.

Largely on the strength of "Wheel of Fortune," King World's net income soared 418.5% from the year before to $3.4 million and revenues leaped 255.8% to $29 million in the fiscal year ended Aug. 31, 1984.

Analysts say results for the fiscal year that just ended should also take a healthy jump, estimating earnings at $1 per share for fiscal 1985, up from 37 cents per share the year before. Per-share earnings should rise to $2 in fiscal 1986 and to more than $3 in fiscal 1987, based on new programs that King World will distribute in future seasons, they say.

King World made its initial public offering of stock only last December at $10 per share and followed in July with a two-for-one stock split. Its shares, which are traded in the over-the-counter market, have recently hovered around $20 per share, compared to a split-adjusted $5 per share only 10 months ago.

"It's been one heck of a year," said King, who is company president and is based in the Beverly Hills office. King's older brother Roger is King World chairman and its top salesman. A non-family member, Stuart Hersch, joined the company in late 1983 as chief operating officer.

"I think their prospects are terrific," said Barry A. Kaplan, an analyst with Bear Stearns & Co. "They've got this big hammer in 'Wheel of Fortune' and 'Jeopardy!', " another Merv Griffin game show that was revived in syndication last season and is currently the third-highest rated syndicated program. "Stations are willing to take a look at what they have to distribute," Kaplan said.

'Intriguing Company'

Entertainment analyst Lee Isgur of Paine Webber called King World "an absolutely intriguing company" that provides investors an opportunity to invest in the lucrative TV syndication market.

"Normally these companies are owned by a single individual and they run it as a private company and you never get a chance to invest in the thing," he said. King World's future earnings are easy to predict because every year the company amasses millions of dollars in revenues that it can't record until the shows that generate the funds go on the air, he said.

As a syndicator, King World buys the rights to distribute a television program and then lines up television stations to air it. Stations pay the producer and distributor with cash and advertising time, which King World then resells.

The proceeds from the cash license fees paid by the television stations and the advertising time are then split between King World and the producers of the show. Syndication of first-run programs has become big business in recent years because of the tremendous increase in the number of independent television stations--to about 240from 75 a decade ago--and the fact that fewer network shows run long enough now to make their reruns good candidates for syndication.

King World now syndicates four shows produced by Merv Griffin Enterprises, including "Headline Chasers," a new game show that premiered in September. This season, King World also started distributing a late-night music show called "Dick Clark's Nitetime."

Classic Film Library

King World also owns a library of such classic films as "Joan of Arc" with Ingrid Bergman and "Anna Karenina" with Vivien Leigh, a collection of detective movies such as the Sherlock Holmes series starring Basil Rathbone and Nigel Bruce, the "Topper" television series of the early 1950s, among other holdings. And, of course, the "Little Rascals" series.

"Sometimes you get caught up in your work and you watch 'Little Rascals' and it just brings you back down to earth," King said.

King World has been so successful because "they do more than just go into a station and just sell a product," Isgur said. The company researches extensively "to try to find out what is the best station and what is the best time period," he said.

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