...And Kluge May Do A `Screen' Play

John Kluge also wants to make a big hit in the movies. So he is zeroing in on Orion Pictures, which has just emerged from Chapter 11. To many analysts, the motion-picture company might as well be dead. "I don't think Orion will ever come back to become a major player in the film industry," says one analyst at a large investment firm.

But Kluge appears to believe otherwise. He recently raised his stake in Orion to more than 56% through share purchases in the open market. That pushed up the company's stock price from 2 1/4 on June 14 to 8 on Sept. 15. Kluge has also personally guaranteed the film company's senior debt of $300 million. A Metromedia spokeswoman declined comment.

Why? "He understands the value of Orion's film library and may either buy Orion or become the catalyst for raising its stock's price," figures Steven Abernathy of New York investment firm Cowen & Co "Few investors understand how to build a company and recognize value better than Kluge," he adds.

Abernathy feels that Orion will soon attract a buyer. As cable-television companies open more channels, he says, they are scouting for companies with film libraries. He notes that major film libraries have become scarce.

The analyst puts Orion's book value at $8.30 a share. That, plus a recurring cash flow of more than $2 a share, says Abernathy, puts the current worth of Orion at $16. He figures this valuation will rise significantly over the next two years as debt is paid off. Orion is now operating under the guidelines of the Federal Bankruptcy Court, which stipulates that all revenues go toward paying off debt. But Orion is allowed to lease or rent out its library of 750 films, which include such goodies as Dances With Wolves, The Silence of the Lambs, and The Addams Family.

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