COMPANY TOWN: HOLLYWOOD MEGA-DEAL : Seagram’s Big Gulp : THE FINANCIAL PICTURE : NEWS ANALYSIS : Will Company Find Its MCA Cup Half Empty or Half Full?

Is Seagram Co. getting its money’s worth in buying MCA?

Whether the $7 billion that Seagram is expected to pay for 80% of the entertainment company is high or low depends on what the buyer can do with MCA’s assets and potential, analysts said Thursday.

“The problem is you have no idea what’s included,” said Lee Isgur, entertainment analyst for Jefferies & Co. “Are they buying MCA and Sid Sheinberg and Lew Wasserman and a relationship with Steven Spielberg? Or are they buying real estate in the San Fernando Valley, some theme parks and a headless horseman?”--a reference to the possibility that MCA’s longtime leadership team of Sheinberg and Wasserman are planning to leave at the end of this year.

However, Isgur noted that the Bronfman family, which controls Seagram, has a prior business relationship with the MCA executives, dating from their late-1980s financial rescue of Cineplex Odeon.

That might mean that Wasserman and Sheinberg, who are highly discontented with MCA’s owners, Matsushita Electric Industrial Co., might be willing to prolong their role in the company.

Valuing assets of an entertainment company can be a subjective process. On paper, MCA’s are impressive. They include Universal Pictures and its library of 3,000 films; theme parks here and in Orlando, Fla.; Geffen Records and MCA Records; Putnam Berkley Publishing; a 50% interest in cable channel USA Network, and 23% of Cineplex Odeon.

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Internal company estimates place the market value of the music holdings alone at $2.2 billion to $3 billion.

Valuing the total company on the market size and revenues of its assets, analyst Isgur said, “I’d have to give MCA a value of no more than what the Japanese paid for it in 1990”: $6.6 billion. Seagram’s reported bid values the company at $8.75 billion, however.

“But if you tell me that DreamWorks SKG (the new film company co-founded by Spielberg, Jeffrey Katzenberg and David Geffen) will rent studio space at Universal and let Universal distribute its products for the next 10 years, then maybe you can justify paying the higher price,” Isgur said.

Moreover, it’s hard to place a precise value on MCA’s assets today, because for five years its revenue and income have been subject to the accounting practices of its huge Japanese parent, meaning it may have been skewed by intercompany transfers.

In any event, MCA’s true value will depend on how well Seagram can exploit its potential. Analysts recalled Thursday that Ted Turner was derided in 1986 for paying $1 billion for MGM’s film library, but later won admiration for using the library as the basis for his TNT cable television network, which greatly increased the films’ value.

Film companies are attractive to big-money bidders because assets in the entertainment business are more dynamic than fixed. Viacom Inc. paid $10 billion last year for Paramount Communications Inc. And Seagram paid $2 billion for 14.7% of Time Warner Inc., a stake it is expected to sell now that it is acquiring MCA.

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The $7 billion is an enormous outlay for Seagram, a world-leading distiller and vintner with $6.4 billion in total sales last year. To raise the money, Edgar Bronfman Jr., Seagram president and chief executive, Thursday sold his company’s 24% holding in DuPont back to the chemical company in a transaction valued at $8.8 billion.

But Bronfman reportedly is happy to trade chemicals for entertainment because of the overseas growth markets for films and television programs foreseen by everyone in Hollywood these days.

“China, Russia and Eastern Europe are opening up,” says one movie financier. “True, there aren’t many theaters in China yet, but there will be.”

At that, the $8.75 billion value that Seagram is putting on MCA is less than Matsushita paid for the company in 1990, allowing for the depreciation of the U.S. dollar against the Japanese yen.

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Matsushita has not suffered losses in the film business, as has Sony Corp., the other major Japanese film company buyer. But Matsushita’s experience has been no bonanza, either, culminating in a public feud with MCA’s U.S. executives.

“The Japanese investors brought only money to the business,” said one film industry observer, “and it takes more actively engaged management to succeed.”

By holding on to a 20% investment in MCA, analysts said Thursday, Matsushita--a highly respected manufacturing company--may now be following a strategy that will allow it to benefit from the growth of the entertainment business while avoiding many of the risks.

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Times staff writer Chuck Philips contributed to this report.

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MORE MCA COVERAGE

* Seagram will acquire MCA. A1

* Changing studio owners. D4

* Analysts applaud DuPont buyback. D4

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MCA’s Long and Winding Road

MCA has had the most stable management of any Hollywood studio in recent years. A look at some of the key developments in the company’s history:

* 1912: Carl Laemmle combines with several small motion picture companies to found Universal Pictures.

* 1924: With $1,000, eye doctor and musician Julius Caesar Stein abandons his medical career and founds Music Corp. of America in Chicago. By the mid-1930s, MCA represents more than half the country’s major bands.

* 1946: Lew Wasserman becomes president of MCA, 10 years to the day after he was hired.

* 1952: The Screen Actors Guild grants MCA a waiver from a regulation prohibiting talent agencies from engaging in film and television production. One of Wasserman’s clients is actor Ronald Reagan.

* 1959: MCA hires future CEO Sidney Sheinberg, known for “Sheinbergism”--his ability to become tongue-tied when his mouth moves faster than his very quick brain.

* 1962: MCA purchases Universal Pictures and its parent, Decca Records.

* 1964: MCA begins charging tourists for tram rides through the extensive studios and back lots, initiating the Universal Studios Tour.

* 1968: Impressed with the 20-year-old’s short film “Amblin,” Sheinberg signs Steven Spielberg and allows him to direct an episode of the television series “Night Gallery.”

* 1973: Sheinberg is named president of MCA.

* 1986: Thomas P. Pollock is hired as Universal’s motion picture director.

* 1987: Entertainment Weekly ranks Pollock the sixth-most powerful executive in Hollywood, citing his ability to make lower-budget films.

* 1988: Along with the investment group Boston Ventures, MCA, once known as the “Musical Cemetery of America” for its catalogue of old and aging music rights, buys Motown Records for $61 million. Two years later, MCA purchases Geffen Records (whose current artists include Guns N’ Roses and Hole) for an estimated $545 million in MCA preferred stock.

* 1990: Wasserman and Sheinberg agree to the largest acquisition of a U.S. company by an offshore corporation when Matsushita Electric Industrial buys MCA for $6.6 billion.

* 1994: Relations between MCA and Matsushita deteriorate. MCA executives complain that Matsushita has kept MCA’s hands tied on strategic decisions.

* 1995: Matsushita begins talks for a possible sale without informing Wasserman, Sheinberg or other MCA executives.

Sources: Times staff and wire reports. Researched by DAVID NEIMAN and JENNIFER OLDHAM / Los Angeles Times