Deal Forces Disney to Give Up KCAL : Television: Studio swaps its Channel 9 ownership for a 45% stake in Pinelands Inc., owner of superstation WWOR-TV. The transaction is subject to FCC approval.

By JOHN LIPPMAN

March 31, 1992 12 AM PT

TIMES STAFF WRITER

In a move that involves the Walt Disney Co. giving up control of its Los Angeles TV station, the studio on Monday said it had swapped its ownership of KCAL-TV Channel 9 for a 45% stake in Pinelands Inc., owner of WWOR-TV, a superstation based in suburban New York.

With the transaction, Secaucus, N.J.-based Pinelands joins Tribune Co. and Fox Inc. in owning independent stations in the nation’s second-largest television market. For Disney, the deal also could boost the studio’s expanding interest in TV production by giving it another valuable outlet for programming.

The parties declined to put a value on the transaction, which is subject to approval by the Federal Communications Commission.

If the deal goes through as outlined Monday, Disney will control four of Pinelands’ nine board seats, signaling that Disney management will have a strong say in the running and operation of both TV stations. However, Disney said that it signed a stand-still agreement not to acquire more Pinelands stock.

Pinelands was formed last year when WWOR was spun off from Los Angeles-based MCA Inc. after the studio was acquired by the Japanese consumer electronics giant Matsushita Industrial Electric Co.

“Having both the Los Angeles and New York market increases the leverage for the kinds of programming we want,” said Pinelands Chief Executive Larry Fraiberg. “This is a strategy we’ve been trying to do for years, even when we were with MCA.” Both channels were owned by RKO General before it was forced out of the television business in the mid-1980s.

Disney bought KCAL-TV in 1987 for $217 million. In addition, Disney spent another $103 million to acquire Fidelity Television, a Los Angeles investment group that had waged a battle for the station’s license since 1965.

Erwin Okun, a spokesman for Disney, said that the studio would have a strong voice in the management of both stations, which together reach more than 12% of all TV households in the country.

That kind of penetration could provide Disney a powerful leg up in launching syndicated TV programs produced by the studio. Stations in smaller TV markets may follow the lead of Pinelands’ big-city stations in deciding what shows to schedule.

Disney’s Buena Vista TV arm distributes such programming as “Golden Girls” reruns, the “Siskel & Ebert” film review shows and the popular “Disney Afternoon” cartoons.

“This deal makes a lot of strategic sense,” said Paul Marsh, an analyst with Bateman Eichler, Hill Richards in Los Angeles. “Pinelands and Disney have the two largest markets for first-run syndication in the country. By having Disney in their camp, Pinelands will have access to their programming.”

Pinelands said that it planned no management changes at KCAL.

In 1991, Pinelands lost $5.3 million on revenues of $166.2 million.