MONEY
British Lion—curin the mange
Nicholas Davenport
thebve every one a good laugh to read. Its :ritiah Lion had come ' roaring back.' Nov 111°tation had been suspended last etIlber when 68p — on a reverse hsji 'er bid from Star Associated, a bingo blanh4bd cinema private company, uh i'lle-t,ed a £20 million film-making group. p. lias -uth of the matter is that British Lion. --c6tvre °Irl.e limping back with its up tail a 6en its legs content to be eaten n Seetl"riTI; grY conglomerate — Barclayt 16"es. The new quotation opened at Ikl. Thr,ed 1113 ' to 170 and came back of .arel, -enterprising Mr John Bentley l o 8har'Y Securities is offering two Barclay callve: Phis 370 in 9* per cent part y OlarZrtible loan stock for every seven price"' of t ritish Lion which at present I37 'bakes British Lion worth about e offer Slate Walker are underwriting the 115D. allcl will give a cash alternative of The. b. which is valued at around £54 Iltitisthl' raises a lot of important questions. (1,,..4eslinr,i" has always raised important 3 ever since it borrowed p),`P,orat'.115rn the National Film Finance r,f1" (When Harold Wilson was of the Board of Trade) and lost tsPP 11,1 i: been an original member of C)r of I was able to tell the inside his affair in this column last `4tripa;7er 18. In 1955 the bankrupt 00 alsn,,taken over by the NFFC and '4 when it was bought for 1°4 bY a syndicate headed by Lord s. ha-41 max Rayne and the Boulting 8.teerl"s' 's.libiect to aspecial preference k11) 411ilit Y to the government). The '4114111111't tts...to come to the rescue of the film industry but in spite of fine words, good intentions and great efforts it failed to do so. Its pre-tax profits for the year to March 1971 fell from just under £300,000 to £137,000. The superfilms never appeared and the Shepperton studios remained half empty. A blight has fallen on our film industry and the first quarter of 1972 saw less than EIO million invested in British film-making.
The last thing I would expect of Mr John Bentley, who is a dedicated and extremely clever money-maker, is to take up the banner of British films and lose his shirt in new productions. He was reported in the press as saying, We did not have to give undertakings in this respect to secure agreement to the bid.' Every one assumes that he intends to close down the studios and embark on a major property development of the sixty acres they cover. The film technicians union regard this as a disastrous blow' to the British film industry. But the fact has to be faced that not only are there two few films being made to keep the studios occupied but producers everywhere tend to do their shooting on location because it is cheaper. I hear that our most successful producer John Woolf, whose company, British and American Film Holdings, is making the thrilling story of the attempted assassination of de Gaulle (The Day of the Jackal) is filming on location in France and will only need to come into a studio for a week or two.
Films apart, the British Lion affair raises once again the wider question of the ethics of takeover bids and the asset-stripping by conglomerate carnivores. When Mr Anthony ny Crossland was President of the Board of Trade he was greatly concerned about mergers and takeovers which, he said, often gave rise to capital gains on an enormous scale.' He issued a booklet called 'Mergers: A Guide to Board of Trade Practice' together with the text of the City Code on takeovers. Mergers are good, he said in effect, if they lead to better management or economies of scale or the more efficient use of resources; they are bad if they lead to inertia or a lack of competition or an abuse of market power. On this basis Mr Bentley might well justify his aquisition of British Lion which is clearly not putting its resources to the fullest use. One of its subsidiaries is Pearl and Dean, the dispenser of film advertisements, and this could fit into the advertising division of Barclay, which consists of Mills and Allen, the outdoor poster advertising firm, and Dorland Advertising. It was significant that when Mr Bentley bought control of these two firms he immediately paid for two thirds of their £64 million cost by selling off peripheral activities and effecting management economies. He could do likewise with British Lion if he were to dispose of the valuable property at Shepperton, the office block in Soho and the film library.
Mr Bentley has always denied that he is a conglomerate and it worries me that his acquisition of British Lion brings him virtually into that species. His other two divisions — toy-making and pharmaceutical wholesaling — are realms apart, but so far he has had no difficulty in running a company divided into three parts and managing it brilliantly. He now claims to be the biggest European toy manufacturer and the biggest force in outdoor advertising. He almost doubled his companys profits in 1971. But it is strange that in an interview with Mr Spiegelberg of the Times four months ago he said that three industries are the maximum that his company can be in at one time as a single corporate entity. Perhaps he intends to spin off one or two of his divisions by floating them as separate companies on the market. According to Mr Spiegelberg he has spent over £17 million in the past two and a half years in acquiring nearly twenty companies which he has either developed or sold off. British Lion is not such an easy animal to digest or spit out.
Another strange feature of this affair is that it was not so long ago that Lord Goodman was lamenting in the Sunday press that when an important company or industry changed hands the only consideration given was the will of the shareholders who were motivated solely by the market price. I understand that the directors of .British Lion speak for 53 per cent of the shareholders and I am not suggesting that they were motivated only by Barclay's market price. They may have been motivated by despair, seeing the gloom in the studios, or they may have been motivated by hope, believing that they can touch Mr Bentley for half a million for their proposed Film Bank. But until more information is given about the film intentions of the new board, of which Lord Goodman remains chairman, we shall not know who is playing out of form — the ex-chairman of the Arts Council or our most promising young entrepreneur in the City jungle.
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