United Artists theater chain to be sold Merrill Lynch part of $680 million deal

February 20, 1992|By Geraldine Fabrikant | Geraldine Fabrikant,New York Times News Service Michael Dresser of The Sun's Business staff contributed to this article.

,TC Tele-Communications Inc., the nation's largest cable operator, agreed to sell its United Artists movie theater chain yesterday for $680 million to a company owned by Merrill Lynch Capital Partners Inc. and the former chief executive of United Artists, Stewart Blair.

The move came a day after Tele-Communications said it was buying 49.9 percent of Teleport Communications Group, a corporate telephone service that is owned by Merrill Lynch & Co. and Cox Enterprises. No terms were disclosed.

With the transactions, analysts said, Tele-Communications appeared to be leaving a business threatened by the growth of home entertainment to one where -- if certain government restrictions are lifted -- it could offer more information and other services by wire.

For the United Artists deal, Merrill Lynch Capital Partners, Mr. Blair and other executives of the theater chain will form a new company in which Merrill Lynch will put up the bulk of its capital. The company will pay for the theater circuit with $92.5 million in preferred stock, the assumption of $150 million in debt and the balance in cash.

United Artists is the largest U.S. theater operator, with 2,398 movie screens in 502 locations in the United States and Puerto Rico.

The sale is expected to have little effect on UA's Maryland theaters. "Whether UA owns them or General Cinemas owns them, they're there," said Irwin Cohen, president of Baltimore-based R/C Theaters. "Some faces will change in the home office, but that's all."

United Artists, together with Loews and K/B Theaters, is one of the largest theater operators in the Baltimore area based on the number of screens.

Analysts say the future of the movie theater business is unclear. Although theaters generate strong cash flow, their growth potential is considered low.

In addition, movie theaters face a strong challenge from the potential growth of pay-per-view television, which enables cable subscribers to select from a variety of programs and pay for them individually.

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