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Sony Agrees to Buy Guber-Peters Entertainment, May Find Role at Columbia

September 29, 1989

NEW YORK (AP) _ Sony Corp. has agreed to buy the moviemaker Guber-Peters Entertainment Co. Inc. and indicated its owners would be offered roles at another prospective Sony operation, Columbia Pictures Entertainment Inc.

Sony said Thursday it agreed to pay $17.50 a share, or $200 million, for Guber-Peters, the Hollywood company headed by producers Peter Guber and Jon Peters that counts the movie hits ″Batman″ and ″Rain Man″ among its credits.

Including Guber-Peters’ debt that Sony will inherit, the deal is valued at $240 million.

The move came a day after Sony, the Japanese electronics giant, took its biggest step into the ″software″ side of the entertainment business by agreeing to pay $3.4 billion for New York-based Columbia Pictures.

A potential snag to the deal developed Thursday, however, when three Columbia shareholders filed a lawsuit in Los Angeles County Superior Court attempting to block the takeover.

The suit, filed by shareholders Elfriede Glancy, Linda Zelden and Melvyn Zupnick, accused Columbia’s board of directors of settling for an offer from Sony that was far less than what the company is worth. It asks that the board be ordered to cooperate with others seeking to buy the company.

A Sony spokesman in Tokyo, Tom Sugiyama, said the suit was a matter between Columbia and its shareholders and that Sony had no other comment.

The purchase of Guber-Peters dramatizes Sony’s eagerness to shore up Columbia’s floundering film production.

Guber-Peters has a tangible net worth of just $2 a share, according to Michael Tennenbaum, vice chairman of investment banking for Bear, Stearns and Co., which appraised the Sony offer for the Guber-Peters board.

But the company has much greater intrinsic value, Tennenbaum said, because of its television assets, future profit payoffs from ″Batman″ and, most important, because of its ″management and track record.″ Guber and Peters are considered to be two of Hollywood’s hottest producers.

In announcing that its board agreed to the deal with Sony, Columbia said its president and chief executive, Victor A. Kaufman, and its chief operating officer, Lewis J. Korman, had indicated they intended to ″move on to other endeavors″ before any deal was completed.

There have been published reports that Guber would be asked to replace Kaufman at Columbia once the acquisition is completed.

Kaufman and Guber failed to respond to repeated requests for comment.

Michael Schulhof, vice chairman of Sony Corp. of America, also declined to comment directly on those reports Thursday.

But he said in a telephone interview, ″We are hopeful that the management of Guber-Peters will work out some of their existing contractual arrangements in a way that will make it possible for them to join Columbia Pictures.″

Guber and Peters recently renewed a five-year production contract with Columbia rival Warner Bros., and are working on a ″Batman″ sequel due in 1991 and film adaptations of the books ″Bonfire of the Vanities″ and ″A Bright Shining Lie″ for Warner.

Rights to those films are owned by Warner Bros., and it is conceivable that Guber-Peters might still make them for the rival studio. Columbia would benefit by receiving a share of the film’s profits through Guber-Peters.

A spokesman for Warner, Rob Friedman, declined comment on the contracts with Guber and Peters.

The two producers have worked together for years and industry executives said it was unlikely that one of them would take a role at Columbia without the other.

Two years ago, Guber and Peters merged their privately-held production company with Barris Industries, which made ″The Gong Show,″ among other TV programs.

In the fiscal year ended May 31, Guber-Peters lost $19.2 million on revenue of $23.7 million. The company has yet to realize any profits from either the Academy Award-winning ″Rain Man″ or ″Batman,″ one of Hollywood’s most successful films.

Sony said it intended to begin a tender offer for all of Guber-Peters’ shares next week. That is also when it intends to begin its tender offer of $27 a share for Columbia.

Also on Thursday, Columbia reported it earned $13.0 million, or 10 cents a share, in the three months ended Aug. 31, up from 6.2 million, or 4 cents a share a year earlier. Second-quarter revenue rose to $453.4 million from $373.1 million a year earlier.

For the first six months of its fiscal year, Columbia said it earned $15.0 million, or 10 cents a share, compared with $10.5 million, or 7 cents a share, a year earlier. Six month revenue rose to $804.5 million from $783.6 million.

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