Lorimar Telepictures announced Wednesday the conditional sale of two New York advertising agencies for $143 million. They are among the peripheral assets that the loss-stained Culver City entertainment firm decided last June to shed.
The management of Bozell, Jacobs, Kenyon & Eckhardt is buying that agency along with the much smaller Poppe Tyson agency. Both are based in New York.
Although a definitive agreement was signed, Lorimar Telepictures said the deal is subject to "customary closing conditions," including the obtaining of financing. About $22 million of the price is to be paid in future installments. The company said it anticipates closing the sale within 75 days.
The cash infusion is expected to permit Lorimar to proceed with a planned buyback of 15% of its outstanding stock as part of a restructuring announced in June.
Lorimar reported a $58.6-million loss last fiscal year and a $7.1-million loss in the first quarter ended June 30.
Acquired in 1985
The entertainment firm's chairman and chief executive, Merv Adelson, said Wednesday that the sale furthered the company's plan to focus on its core business of creating, producing, acquiring and distributing television and home video programming and theatrical motion pictures.
Lorimar previously agreed to sell three of its six television stations and has sold its children's publishing division. The other three stations and US magazine are still up for sale, as is Lorimar's 40% stake in the Caroline Jones advertising agency.
Bozell Jacobs is the 12th-largest ad agency in the United States, with annual billings of more than $1.4 billion, Lorimar said. The agency has offices abroad in 43 cities in 37 countries, as well as eight U.S. offices. Poppe Tyson, with annual billings of $70 million, has offices in New York, Boston and Union, N.J.
Lorimar acquired Bozell & Jacobs in 1985 for $40 million and added Kenyon & Eckhardt in 1983 for $20 million. Merrill Lynch Capital Markets, hired to assist management in obtaining the financing for the leveraged buyout, has written a letter stating it is "highly confident" it can arrange "certain subordinated debt required to complete the financing," according to the announcement.
Analyst Alan Gould of Furman Selz Mager Dietz & Birney said the purchase price for the agencies appeared "attractive." Discounting the $22-million deferred part of the payment, he said, brings the price to about $130 million in present value. He said he sees no reason to doubt that the financing can be arranged.
A Lorimar Telepictures meeting last Thursday with analysts in New York gave a "very positive" impression of the company's future course, Gould added.
Bozell Jacobs' chief executive, Charles D. Peebler Jr., is among those expected to hold an interest in the new owner group. One Wall Street report indicated that Merrill Lynch might obtain a minority interest.
However, details on the individuals and their participation have not been ironed out yet, according to Larry Dobrow, the agency's executive vice president.