Inside Wall Street
MAYBE YOUR DIAL SHOULD STAY TUNED TO KING WORLD
When King World Productions announced on June 6 that it had closed deals with some TV stations to air its top three syndicated shows until 2000, some Street pros took the news as a portent of something bigger: a buyout. The top programs King World produces and distributes are Wheel of Fortune, Jeopardy, and The Oprah Winfrey Show.
"Mark my words," says a money manager in Beverly Hills, Calif., who has been accumulating shares, "King World will be the next Paramount Communications." Paramount, as every business student knows, was embroiled in a fierce takeover battle between Viacom and QVC Network. This pro insists the stock of King World, trading at 39, will hit the 60s in a buyout fight.
He says Capital Cities/ABC, the entertainment giant, "is poised to make a friendly bid for King World at $55 to $60 a share." The rumor is that Cap Cities/ABC will make its move now, before the impending elimination of the Federal Communications Commission rule on financial interest and syndication ("fin-syn") that bars TV networks from producing and owning their own syndicated shows. Once fin-syn goes, possibly by 1995, the shares of King World will soar, says this investor. A King World spokeswoman declined comment. Cap Cities is always looking for apt acquisitions, but "our policy is not to comment on them," says a spokeswoman.
WON'T SAY NO. Jessica Reif, Oppenheimer's media and entertainment maven, has no quarrel with such speculation. She isn't ruling out CBS as a potential bidder, though. "It could be any of the networks, including NBC," says Reif, who has a buy recommendation on the stock. "Right now, King World is in the enviable position of dominating a market sought after by the giant networks."
She doesn't think King World will nix the idea. She sees it at least merging with a major network or doing a joint venture. The networks are now enjoying an improved economy, which benefits King World: It can raise the price of its shows.
"In any case, shares of King World are inexpensive under any scenario," says Reif. Even without a buyout, she figures the stock will climb to 50.
Paul C. Marsh, entertainment analyst at NatWest Securities, says King World's recent deal with broadcasters will double its license fees to about $1.9 billion. Marsh calculates that King World will earn $2.70 in 1994 and $2.90 in 1995 (excluding the fees from the recently renewed contracts for its top shows).GENE G. MARCIAL