Comsat to acquire filmmaker

October 28, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

Comsat Corp., that button-down bastion of satellite engineers, has slipped on its shades and gone Hollywood.

The Bethesda-based telecommunications company, whose recent successes in video distribution and professional basketball have stimulated its appetite for entertainment dollars, announced yesterday that it would acquire independent filmmaker Beacon Communications.

The agreement to buy the Los Angeles-based producer of "The Commitments" involves a promise by Comsat to pay $10 million in cash, $19 million to cover Beacon's liabilities, and unspecified future cash payments, said Bruce L. Crockett, president and chief executive of the Maryland company.

With the acquisition, Comsat joins the swelling ranks of formerly staid telecommunications companies that have felt the lure of Tinseltown. Bell Atlantic Corp., Nynex Corp. and Pacific Telesis are expected to announce a joint venture with Hollywood agent Michael Ovitz next week to develop interactive entertainment.

The Beacon deal, which was brokered by Mr. Ovitz, was one of two high-profile entertainment ventures announced yesterday by Comsat Video Enterprises, the Comsat subsidiary that owns the Denver Nuggets and operates a video-on-demand network serving the hotel industry.

In the second venture, Comsat announced it has signed a tentative agreement with the Anschutz Corp. to build a $110 million sports and entertainment complex in Denver. The new arena would become the Nuggets' home and would be used as bait to lure a National Hockey League franchise, Mr. Crockett said.

Along with Beacon, Comsat is acquiring the creative talents of the production company's chairman, Armyan Bernstein, and its president, Marc Abraham, who will stay in their positions under five-year employment contracts loaded with incentives to crank out hits. Beacon's domestic distribution agreement with Sony Pictures Entertainment will carry over.

Beacon is a small production company with interests in films, television and records.

Beacon's films to date have not been big-budget blockbusters but modestly priced features such as "Sugar Hill" (1994), "A Midnight Clear" (1991) and "The Road to Wellville," which opens today.

Mr. Crockett acknowledged that the boom-and-bust cycle of the movie business will bring a measure of volatility to Comsat's earnings, but he said the effect will be diluted by Comsat's more than $800 million in annual revenue.

He also acknowledged that Comsat has a checkered past when it comes to ventures outside its core business.

Of note is a disastrous venture into the direct broadcast satellite business about a decade before the technology had come of age.

Still, Mr. Crockett insisted that Comsat ought to be in show business.

"Telecommunications and entertainment are merging," he said. "These ventures put us on both sides of this convergence and give us greater control of content, positioning Comsat as a major player in the sports and entertainment business."

Investors weren't giving the deal rave reviews, however. Comsat stock slipped 50 cents, to close at $22.125.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.