Entertainment giant MCA Inc., which ventured into the toy business in a bid to retain more profits from the lucrative merchandising of its film properties, said Monday that it will sell its beleaguered LJN Toys unit and take a $53-million charge against earnings for the discontinued operations.
Despite the charge, the company also said it expects to report a record profit for the year.
The disclosure of the planned sale by a resurgent MCA--a diversified entertainment company whose businesses include the production and distribution of movies, television shows and recorded music and the Universal Studios Tour--pleased analysts. They said MCA, which last year catapulted from sixth to second place in market share of domestic film rentals on the strength of such hits as "Parenthood" and "Back to the Future Part II," will be a more financially successful company if it returns its focus to its entertainment roots.
"The toy business is a very tough business," said Harold Vogel, an entertainment industry analyst with Merrill Lynch. "Thank goodness they are done with it; they never belonged in that business."
In another development Monday, MCA reached settlement in a legal dispute with the Beverly Hills-based production firm Quintex Entertainment Inc., which filed for bankruptcy protection on Oct. 19. Under the terms of the accord, MCA will assume responsibility for future programming sales, and the companies will split future revenue from accounts receivable. Quintex, which is best known for co-producing the popular TV mini-series "Lonesome Dove," had been responsible for distributing certain MCA programming.