VIDEOTAPE MAKER WILL BUY DVD FIRM; CARLTON TO PAY $264 MILLION FOR NIMBUS CD.

Byline: Dave McNary Daily News Staff Writer

Carlton Communications, the world's largest videocassette manufacturer, gave a strong endorsement Wednesday to the DVD format by agreeing to buy disc producer Nimbus CD International Inc. for $264 million.

The deal will triple Carlton's capacity to produce so-called digital versatile discs, which offer a potentially lucrative revenue source to Hollywood studios.

``This is a sensible way for Carlton to commit to DVD,'' said analyst Thomas Adams, head of Adams Media Research. ``They're already the biggest player in cassette duplication, so it looks like they've decided the future is round.''

Both companies are making significant expansions in DVD. Nimbus, of Carlottesville, Va., announced last month it would double annual capacity to 28 million discs; London-based Carlton announced in February it would triple production at its Technicolor plant in Camarillo to 15 million.

DVDs, which are the same size as audio CDs with seven times the capacity, can play full-length movies with digital clarity, six-channel sound, instant rewind and massive amounts of stored information. About 200,000 DVD players were sold in the 12 months following their launch early last year.

``DVD has performed head and shoulders above any other consumer electronics introduction in recent years except for direct-broadcast satellite TV,'' Adams said. He predicted strong continued growth for the format, aided as DVD-ROM drives become standard in most personal computers by 1999.

A bare-bones DVD player currently sells for about $400, while discs sell for about $20 each, with more than 1,000 titles now available.

Carlton will pay $11.50 a share for Nimbus and said shareholders owning 44 percent of Nimbus had agreed to back the deal. Nimbus had announced last week that it was in talks with an unnamed suitor over a bid at $11.50 and its shares rose 7/16 to 11 3/16 Wednesday.

Technicolor's North Hollywood plant is world's largest processor of motion-picture film and Technicolor factories produce 650 million videos and 40 million CDs a year. Nimbus, which earned $2.6 million on sales of $30 million in its most recent quarter, can produce 260 million CDs annually.