Inside Wall Street
PLACING A BET ON JOHN KLUGE
What's billionaire John Kluge up to these days? He's trying to get back into the media, entertainment, and telecommunications business in a big way. He had built Metromedia into a giant company and then sold its assets, mainly radio and TV stations, in 1984 for $4.6 billion. His new company: Metromedia International Group, is focusing its growth efforts in Eastern Europe, Asia, and the former Soviet Union.
"Metromedia International is a bet on Kluge and his group--who have consistently been the first to enter markets with explosive upside potential," says Steve Christensen of Dallas Research & Trading. "We're betting they'll be big winners again in these emerging markets for cable, media, and phone services."
The company results from a four-way merger of Orion Pictures (movies), MCEG Sterling (entertainment), Metromedia International Telecommunications (phone equipment), and Actava Group (a miniconglomerate). Upon completion of this merger in July, Metromedia will be publicly traded, with Kluge as chairman, Stuart Subotnick as vice-chairman, and Jack Philips as president and CEO.
Investors can get in on the new Metromedia now by buying either Actava (ACT), at 9, or Orion Pictures (ORPC), at 6. Chistensen estimates that the new Metromedia, which will trade on the Big Board in July, has an intrinsic value of 30 a share.
The company has formed joint ventures with the governments in 18 countries in Eastern Europe and the former Soviet bloc to provide phone, cable, and media services. It has also signed similar agreements in two provinces in China. BY GENE G. MARCIAL