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Tim Matheson, Animal House ‘Otter’, Becomes a Takeover Specialist

April 2, 1989

NEW YORK (AP) _ It sounds like something from a Hollywood script: An actor turned takeover strategist wrests control of a movie company away from its founder.

That’s what Tim Matheson, better known as the philandering frat-brother Otter in ″Animal House,″ has done with National Lampoon Inc., which produced the 1978 hit film and publishes National Lampoon magazine.

Matheson and partner Daniel Grodnik don’t see themselves in the same vein as Carl Icahn or Ronald Perelman, the takeover strategists who respectively bought Trans World Airlines and Revlon Inc.

″We want to build a company,″ Grodnik said in an interview, with Matheson chiming in: ″a significant entertainment company.″

Yet the pair won National Lampoon through some tried-and-true methods of corporate acquisition - perhaps because they were schooled by David Batchelder, ex-adviser to another renowned takeover strategist, T. Boone Pickens Jr.

Matheson and Grodnik, an independent film producer, hankered for their own movie company after they co-produced the film ″Blind Fury.″

They retained Batchelder, telling him they wanted to raise $50 million to form a production company.

But Batchelder said it made more sense to buy an existing company rather than start from scratch - a lesson many corporate acquirers and entrepreneurs have learned.

Grodnik quoted Batchelder as telling the pair, ″Just find a company that has an operating history and that you feel is undervalued in the marketplace.″

They settled on money-losing National Lampoon, whose stock price was languishing at around $2.50 a share.

Was it a coincidence they chose the producer of ″Animal House?″

Not entirely. ″It fit all of our needs and purposes,″ Matheson said. ″It was the best company that we came up with.″

With Batchelder’s help, Grodnik and Matheson persuaded nine National Lampoon stockholders to assign the pair their voting rights. These stockholders had bought at $7 or $8 a share, Grodnik said, and ″they wanted some relief.″

The agreements gave the pair control over 18.5 percent of the stock, and a 3 percent stake they bought boosted the figure to 21.5 percent.

At that point, late last year, they approached National Lampoon founder and chairman Matty Simmons and said they wanted to join the company’s management.

Grodnik, Matheson and Simmons downplayed any resemblance between this deal and a classic takeover fight.

″It wasn’t a takeover,″ Simmons said in an interview.

But Matheson acknowledged that, ″It was a surprise (to Simmons) that we came in with over 21.5 percent of the voting stock,″ and that it took some pressure to move the National Lampoon founder.

″It became very obvious to him that we’re not going away,″ Matheson said, adding that their voting stake ″became irresistible ... We had this critical mass of support.″

Simmons may have balked at first, but he says now, ″The idea came from me of them buying my stock and taking over the management of the company.″

Simmons said he was tired of trying to run the movie production company in California and the magazine in New York, and wanted to concentrate on filmmaking. So he sold his 8.7 percent stake March 16 to Grodnik and Matheson at $6 a share, or more than $761,400.

Like other corporate acquirers, the men who now control National Lampoon must try to turn the business around. National Lampoon magazine, known for salacious humor after its founding in 1970, has lost readers over the years.

″The company needs direction, money and management,″ Grodnik said.

Matheson and Grodnik admit they have little experience with magazines, but with an injection of outside capital - which Batchelder will arrange - they want to hire people who can revive the magazine’s former glory.

″The magazine’s always been known as the cutting edge of comedy in America,″ said Matheson, but ″the proper attention wasn’t paid to staying on the cutting edge.″

Would they sell the magazine or other National Lampoon assets?

″No way,″ said Matheson.

″We’re not in here to do a Kohlberg Kravis Roberts (deal) where we’re going to piece this thing apart and sell if off,″ he said, referring to the investment firm that has financed multibillion dollar takeovers partly through the sale of corporate assets.

Grodnik said he expected that ″the movie company will strengthen the magazine and the magazine will strengthen the movie company.″

Among the people working on movies for National Lampoon - 11 are in development - is Matty Simmons.

National Lampoon will continue making comedy films under its flagship label, but Grodnik and Matheson also want to do more serious pictures and action movies.

″We’ll come up with our own version of the Touchstone label,″ said Matheson, referring to the Walt Disney Co. division that has produced hits like ″Good Morning: Vietnam″ and ″Who Framed Roger Rabbit.″

Noting that they already have production experience, Matheson and Grodnik sound confident they’ll succeed.

″What we’re doing here is not unlike any business enterprise,″ said Matheson.

He’s not the first actor to try the business end of movies - Clint Eastwood and Michael Douglas are producers - and he rejects the suggestion that an actor may not be qualified to run a business.

Matheson, 41, started in the entertainment business 30 years ago as a child actor in television. He appeared in ″Leave It to Beaver″ and was a regular on ″The Virginian,″ ″Bonanza″ and other shows.

Besides ″Animal House,″ his movie credits include the Mel Brooks film ″To Be Or Not To Be.″

He turned to production with ″Blind Fury″ and last year did an ABC comedy series, ″Just in Time.″ He also starred in the television show - playing a magazine publisher.

Grodnik, 36, said he has always been an entrepreneur, starting in childhood by selling soda and moving on to setting up high school dances, ski trips and concerts.

At the University of Southern California he studied film, and found that producing a movie wasn’t that different from putting on a concert.

Matheson and Grodnik met eight years ago, and began working on the project that became ″Blind Fury.″

″We worked so well together,″ said Matheson. So they made the partnership permanent - and started on the road that brought the actor back to National Lampoon.

End Adv for Sunday April 2

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