It won't lead to a takeover or much of anything really, but the flurry that Donald Trump is causing in the stock of MCA should alert people to the values and potential in what may be the fastest-growing global industry--entertainment.
Trump, the highly publicized developer of glitzy New York buildings and Atlantic City casinos, filed a statement with the government last week declaring his intention to acquire up to 18 million MCA shares, or 24.9%, of the company.
Meanwhile, however, Trump said he owns only 375,000 shares, or less than 1% of the company. And Wall Street arbitrageurs and analysts were skeptical that his declaration of intent was anything more than talk. Even though it was conceded that Trump could appreciate the value of MCA's real estate--as much as $2 billion worth in Los Angeles and Orlando, Fla., says analyst Mara Balsbaugh of the Smith Barney, Harris Upham brokerage--few gave the developer much chance of forcing MCA into a merger or restructuring.
Yet despite such skepticism, there were buyers for MCA stock. Its price rose to $47.50 a share Tuesday from $39.75 last Friday, as investors bought in the hope that some move would be made to realize the great values in MCA--values that are enhanced by what is going on internationally in entertainment.
Markets are exploding. In Europe, where governments used to control all television, many channels have gone private, and the demand for programming is growing--along with the prices European buyers are willing to pay for old American movies and television shows. A series such as "Magnum P.I." may now hope to bring $250,000 an episode in worldwide syndication, where once such programming brought much less than $100,000. And TV expert Les Brown of Channels magazine predicts further rapid growth in Europe and in much of Asia--with particular emphasis on Japan, where the home video market is booming.
Need for Programming
That means entertainment as export. The movies and television shows the world wants are made in America. Firm figures are hard to come by because the Commerce Department counts some exports of movies, TV shows, musical recording and videocassettes under manufactured goods and others under services. But Forbes magazine last year projected a $5.5-billion U.S. trade surplus in entertainment products in 1988, and that estimate is already looking conservative.
It may seem unusual to talk of TV cop shows and old movies as a global industry--but it's perfectly reasonable and even predictable when you think about it. What, after all, do the world's mass markets want in an age when development is spreading, there are more television sets in practically every country and people have more time? From the suburbs of Paris to the outskirts of Taipei, televisions are on for more hours of the day now. And that means a need for programming to fill the air time, which means of course opportunity for the world leader in programming: Hollywood.
So hooray for Hollywood. What does that specifically have to do with MCA? Just this. MCA has one of the largest film libraries in Hollywood and practically the largest library of television programs--oldies but goodies like "Columbo" and "Kojak"; newer hits like "Murder, She Wrote" and "Miami Vice." Some experts estimate that the value of MCA's store of films and TV shows could approach $3 billion.
Talk like that, about real estate and film assets in the billions, may make people like Trump think of takeover. But a takeover of MCA is extremely unlikely.
Chairman Lew R. Wasserman and MCA's management control more than 18% of the stock, are adamantly opposed to unfriendly takeovers and have friends in high places if a raider should be troublesome. When Wasserman, now 74, made MCA one of the first companies to go into making television programs in 1952, he had the help of a client named Ronald Reagan, who remains a close friend to this day.
Far more interesting than idle speculation about an MCA takeover is the growing possibility of a Japanese connection for MCA. Just last month, MCA formed a joint venture with Nippon Steel to develop a Universal Studios Tour theme park in Japan. MCA and Nippon, the world's largest steel company and a major Japanese land holder, said they would also explore other ventures in the entertainment field.
If one day Wasserman wanted to find a friendly investor for MCA, who would not displace or discomfort current management, he could certainly find one in Japan--where business people these days are said to be eager to invest big money in Hollywood. Which only confirms, of course, the values and potential in the global entertainment industry.