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Castle Rock Considers Making Offer for Orion : Entertainment: The small production firm may try to gain control of the ailing studio with backing from Sony's Columbia Pictures unit.

January 23, 1991|MICHAEL CIEPLY and ALAN CITRON | TIMES STAFF WRITERS

Castle Rock Entertainment, a small film and television production company, is quietly examining a plan under which it might try to acquire control of financially troubled Orion Pictures Corp. with backing from Sony's Columbia Pictures Entertainment unit, according to individuals familiar with the plan.

Several individuals said the plan was preliminary in nature but that Columbia had expressed interest in funding a deal. An Orion executive said no talks had been held with his company.

"I would soft-pedal this. . . . But it's a good possibility," one Columbia executive said of the plan Tuesday. The executive suggested that Castle Rock might shut down Orion's film distribution operation and release the studio's movies through Columbia if a deal were eventually consummated.

Columbia owns 34% of Castle Rock and has previously advanced more than $150 million to Orion in exchange for rights to distribute 50 future Orion films abroad and on videocassettes.

Orion, which is 70% owned by investor John Kluge, has been weakened by the poor performance of its movies and disclosed last year that it had retained Salomon Bros., a New York investment banking firm, to seek new capital.

The Castle Rock scheme is apparently one of several plans under which various companies have considered investing in Orion, although no serious bid has surfaced.

Creative Artists Agency Chairman Michael Ovitz was recently asked to advise Castle Rock in connection with the possible deal. But he is also said to be reviewing other partnerships for the company, the bulk of which is owned by movie and television executives Rob Reiner, Alan Horn, Glenn Padnick, Martin Shafer and Andrew Scheinman.

Ovitz has represented actor-director Reiner for more than 20 years. Reiner recently directed "Misery" for Castle Rock.

Spokesmen for Castle Rock, Columbia and CAA declined to comment on the plan.

But one source said Castle Rock executive Alan Horn initiated the plan several weeks ago and has had several discussions with Columbia about possible financing. Columbia is said to have been receptive, in part because it might lose funds that it has already advanced to Orion if the studio couldn't finance future film production.

Horn previously served as president of 20th Century Fox Film Corp. and Embassy Communications. He doesn't carry a corporate title at Castle Rock, where executives work in a relatively free-form partnership.

Orion, the largest film and TV company outside the major studios, reported $488 million in debt at the close of its second fiscal quarter ended Aug. 31. Various individuals said Tuesday that Castle Rock would have to raise at least $400 million to acquire control and begin refurbishing the firm.

Orion has become so strapped for cash that Kluge and a partner personally helped finance one of its recent releases, "Mermaids." Although that film has performed respectably--and Orion's "Dances With Wolves" is considered to be a strong contender in the Oscar race--neither film has garnered enough revenue to reverse the company's fortunes.

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