Coke Buys Embassy & Tandem

Norman Lear Selected Press

Coke Buys Embassy & Tandem

By Michael Schrage
Washington Post Staff Writer
The Washington Post, 6/18/1985

Further diversifying into the entertainment industry, Coca Cola Co. yesterday announced that it would acquire Embassy Communications and Tandem Productions for a mix of stock and cash totaling $485 million.

The two companies were jointly owned and privately held by businessman Jerry Perenchio and Norman Lear, the television producer and creator of such television comedies as “All in the Family.”

The soft drink giant already owns Columbia Pictures Inc., which it purchased in 1982 for more than $800 million.

Embassy will be acquired for Coca-Cola stock, while Tandem will be acquired for cash, said Francis T. Vincent Jr., president of the enter­tainment business sector of Coca-Cola.

Embassy will continue as a television produc­tion company with particular emphasis on half-hour TV comedies, Vincent said. He added that there “will not be very much change” for Embas­sy as a result of the acquisition.

“We are basically buying two things:” Vincent said. “Two attractive, ongoing pro­duction companies and a magnifi­cent television library product that we think over time will be of in­creasing value.”

The purchase gives Coca-Cola a strong position in the fast-growing billion-dollar television syndication market—the market where reruns and other television programs are sold to independent television sta­tions and to network affiliates for non-prime-time broadcasts.

Embassy has a rich library of comedy shows in syndication includ­ing “All in the Family,” “The Jeffer­son,” “Maude,” “One Day at a Time,” and “Mary Hartman, Mary Hartman.”

Currently, Embassy has several comedies now on network televi­sion, including “Diff’rent Strokes,” “The Facts of Life,” and “Silver Spoons.”

“Its a good comedy store,” said one source close to the transaction.  “If you look at Columbia Television, you see there’s not too much com­edy. It’s a good fit.”

From Columbia’s standpoint, the potential syndication assets will give them a much more command­ing presence in the syndication market,” said an executive at a competing Hollywood studio.

However, Embassy Communica­tions and Tandem will operate in­dependently from Columbia. But “the fact that it isn’t going to be a part of [Columbia] doesn’t mean we won’t be looking for synergies,” Vincent said.

While at least one analyst de­scribed the $485 million purchase as “pricey,” Vincent pointed out that that is the price before debt.  Coca-Cola plans to sell off many of the “television receivables”—that is, the existing contracts that sta­tions pay to run Embassy’s pro­grams—“the company’s net invest­ment will be $130 million.”

While many of Embassy’s tele­vision programs have proven suc­cessful both on network and in syndication, Tandem Production’s movie record is less impressive.  The company has produced films such as “The Sure Thing,” “Eddie & The Cruisers,” and “This is Spinal Tap” to relatively poor box-office showings.

Coca-Cola insiders maintain that the movie side of their acquisition may be spun off.  Similarly, though Embassy’s home-video arm that markets videocassettes has been profitable, it conflicts with Columbia arrangements with RCA.  Con­sequently, Vincent said that Embas­sy Home Video may soon be on the block. He said the sale price of that subsidiary is figured into Coca-Cola’s overall estimate that it is paying a net of $130 million for Embassy and Tandem.

Both Lear and Perenchio will leave after the acquisition.  Perenchio is negotiating to buy the Loew’s Theater chain. Lear, in a statement, said he wants to resume writing and directing.