Most unforgettable deal: TV producer to develop show based on Reader's Digest.

Most unforgettable deal: TV producer to develop show based on Reader's Digest 

A small entertainment company with big plans, The Kushner-Locke Co., has bought the rights to develop and produce a television show based on the most widely read publication in the United States. Kushner-Locke plans to adapt the format of Reader's Digest into a daily magazine television show, reportedly negotiating with "a big name celebrity" to anchor the program when it debuts in the fall of 1991. An announcement on the host is expected within two months, according to a Kushner-Locke source.

Publicly traded Kushner-Locke closed four-month-long negotiations with management of Pleasantville, N.Y.-based The Reader's Digest Association Inc. last month, hoping that the "positive, quasi-inspirational" editorial tack that has garnered Reader's Digest its 16.3 million circulation will translate to a staunch audience of devoted viewers for its television show.

Terms of the Reader's Digest agreement were not disclosed, but a company executive did say that the show will cost between $250,000 to $350,000 per half-hour to produce. At least one Reader's Digest editor will work on the show at all times, according to Kushner-Locke.

"Can a television show based on Reader's Digest work?," asked R. Gregg Hillman, senior analyst with Los Angeles-based First Wilshire Securities Management. "It is not a given. But Reader's Digest is a respected and heavily read publication, able to catch the essence of the issues that quicken the pulse of middle America."

Westwood-based Kushner-Locke plans to catch the essence of Reader's Digest with a half-hour program, wrapping two news stories around the humor and shorts that are found within the pages of the magazine.

"The show will not be hysterical," said Peter Locke, a co-chairman of Kushner-Locke. "It will not be exploitative. It will not resemble news tabloid shows currently on the air. You won't see things like: nursing shortage, everyone is going to die. Instead, The Reader's Digest show would treat a nursing shortage story by exploring the issues and informing people about how they might be able to cope with the situation, what they might be able to do to positively position themselves in the face of a nursing shortage."

The Reader's Digest acquisition is arguably the biggest move Kushner-Locke has made since turning public in Dec. 1988, with a $1-a-share offering of 5.6 million shares. It has also added actor Louis Gossett Jr. to its ranks, giving him studio space for the four projects he has in development. According to Locke, the studio is negotiating with a "big-name, female star" for a similar deal.

Kushner-Locke is co-chaired by Syracuse University chums Locke and Donald Kushner, who first met in 1960 while college students and re-aligned in Hollywood in the late 1970s. Locke was producing television's "Starmaker," with Rock Hudson, and Kushner was producing the film "Tron" for Walt Disney Co. Since the teaming, Kushner-Locke has carved out a low-cost niche in television production, watching the bottom line as closely as couch potatoes watch their programs.

"My impression is that Kushner-Locke is an honest and hard-nosed company," said Hillman. First Wilshire has not issued a buy or sell recommendation on the company, he said. "They are low-cost producers with a good feel for controlling cost."

Kushner-Locke has produced television movies, mini series, game shows, cartoons, and cable television series, including the Elizabeth Taylor/Mark Harmon production of "Sweet Bird of Youth," five years of "Divorce Court" and the animated version of "Teen Wolf."

With 42 percent of its revenues coming from cable television, Kushner-Locke operates "basically as a sub-contractor to Home Box Office," according to Hillman.

Kushner-Locke's Home Box Office series "1st and Ten" goes into its sixth year of production in May, planning to complete its 80th episode of the situation comedy based on a fumbling football franchise in August. If it does, the series will sport a large enough library to put the series up for syndication bids in 1991. Kushner-Locke has estimated the syndication value of "1st and Ten" at upwards of $40 million, which Hillman said was a "fairly conservative estimate."

Though Locke said that it is hard to estimate a first-run cable series' value, he said that recurring revenues received from "1st and Ten" will allow Kushner-Locke to complete acquisitions of outside and available film libraries and build a foreign and domestic distribution wing. He said that the company could announce major acquisitions within the next two months, though he would not specify the exact nature of the deal or the principals involved.

For the year ended Dec. 31, Kushner-Locke reported revenues of $2.9 million and net income of $486,000 (3 cents a share) compared with revenues of $4.9 million and net income of $482,000 (4 cents a share) the year previous.

Over-the-counter shares of Kushner-Locke, just under $3 at press time, topped out at $3.43 in the fourth quarter of 1989 and bottomed at $1.18 in early 1989.