John Kluge amassed billions in the '70s and '80s by buying properties and licenses cheap--in entertainment and telecoms--and then selling them off. He's at it again. This time, he's doing it through a rejuvenated Metromedia International Group (MMG)--the result of a series of mergers--of which he's chairman and largest shareholder, with a 23% stake.

Analysts say the latest moves of Kluge and his chief lieutenants, Vice-Chairman Stu Subotnick and CEO John Phillips, are all the more intriguing because Metromedia's stock, now at 9, is way below the intrinsic value of the company's assets. Analysts put Metromedia's worth at 17 over the next six months to a year and at 30 to 35 in two years.

One near-term attraction: Metromedia may split in two. Some investment pros speculate that, before yearend, the company will sell its entertainment operations and focus on telecom. "The film library alone of Orion Pictures [a movie company owned by Metromedia] is worth $10 a share," figures one New York money manager. Orion has a library of 2,200 movie and TV titles.

"The recent sale of MGM Pictures [to Kirk Kerkorian] for $1.3 billion points to the scarcity value of leading independent content providers," notes analyst Mark Manson of Donaldson, Lufkin & Jenrette.

One California investment manager says at least two of the outfits that lost to Kerkorian in the bidding for MGM have made offers to acquire Metromedia's movie group. Apart from Orion, Metromedia also owns Motion Picture Corp. of America, a film producer whose credits include Dumb and Dumber, which grossed $250 million; Samuel Goldwyn Co., which owns 850 film and TV titles; and Landmark Theatre Group, leader in specialized movies and art films in the U.S., with more than 150 screens in 52 theaters.

"Orion may emerge as the most attractive acquisition candidate for any large media player seeking a strategic foothold" in films, says Manson. Unlike MGM, Orion owns almost all ancillary rights to its film library, he notes.

Metromedia's telecom business has even better prospects than its movie business, analysts note. In Eastern Europe, Russia, and China, it has acquired licenses and properties in wireless cable systems, paging and international toll-call services, trunked mobile radio systems, and radio and TV stations.

If Metromedia attains Kluge's vision and becomes the dominant telecom company in Eastern Europe and China, "its value could quintuple in the next 3 to 4 years," says Manson.

Subotnick thinks telecoms in Europe and China are where Kluge will show his investing genius. Phillips notes that because of the enormous demand for phones, radio, and TV in those places, Metromedia's assets will be worth $2 billion in two to three years.

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