By FRANK SWERTLOW

Staff Reporter

Only a few months ago, King World Productions Inc. was hardly getting the royal treatment on Wall Street.

The syndicated TV producer's stock was languishing at a 52-week low of $34 a share, as analysts and investors worried that the company's largest single source of revenue, Oprah Winfrey, might jump ship.

Analysts also were critical of King World holding some $700 million in cash reserves rather than using the money to grow through acquisitions.

Today, New York-based King World has made progress toward "Oprah-proofing" itself by launching new productions most notably a new talk show starring Roseanne (formerly known as Roseanne Barr) and an updated version of "Hollywood Squares."

Recent announcements catapulted King World's stock to a new 52-week high ($58.50 a share) on Dec. 22, and as of last week it was trading just slightly below that mark.

"It's a very strong company," said Jessica Reif Cohen, a media analyst at Merrill Lynch & Co. "It's a fabulous stock. We've upgraded it to a buy."

So has investment bank Cowan & Co. "They have been more aggressive in telling their story," said Harold Vogel, an analyst at Cowan. "It was also a cheap stock, very inexpensive, considering its price/earnings ratio."

Vogel estimates the stock of King World will rise an additional $10 a share in 1998.

To maintain its independence, King World announced last spring that it would gradually buy back 5 million shares, or about 13 percent of the company's total outstanding shares.

"It's all good news," Vogel said, "because they are finally going to do something more with their cash besides sitting on it. Their willingness to use their asset base has been a long time coming."

King World's huge cash reserves and absence of long-term debt had been a source of concern just a few years ago, because the resources weren't being used to grow the company. Wall Street was also concerned that Oprah Winfrey, whose popular daytime talk show generates 40 percent of King World's revenues, might pull the plug.

Winfrey decided in September to keep doing her talk show, meaning that King World will distribute it through at least the year 2000. That renewal came at a high price, however. Last week, the company reported a 1.7 percent drop in first-quarter net income, which was attributed to the high cost of the Winfrey deal.

To soften its vulnerability to Winfrey, King World has made several strategic moves, most notably Roseanne's talk show, which debuts Sept. 14 and has been sold to stations whose signals reach 85 percent of the U.S. viewing audience.

As of last week, sales of Roseanne's talk show had secured King World a two-year revenue stream of $100 million, according to an industry source. Most new syndicated programs are sold on a year-to-year basis, with renewal options.

King World recently renewed syndication deals with TV stations to keep its two hit game shows, "Jeopardy" and "Wheel of Fortune," on the air at least through the year 2002.

The two shows together generate $248 million, or 37 percent of King World's total annual revenues.

The Jeopardy-Wheel and Oprah deals alone mean 77 percent of the company's current revenue stream is ensured at least through the end of the millennium.

King World also has the rights to produce a new version of the once-popular game show "Hollywood Squares." The show is being sold in three-year blocks a virtually unheard-of arrangement yet has "cleared" 71 percent of the country and has been bought by the CBS-owned station group.

"Roger King is the best salesman in the business," said Reif Cohen.

Roger and Michael King, the chairman and chief executive, respectively, are the sons of founder Charles King, a radio syndicator who began distributing the old "Little Rascals" series to TV stations across the country. The King family still owns 20 percent of the company.

Despite the recent success, King World President Jules Haimovitz conceded that earnings will probably be flat for the year ending Aug. 31, because of reduced profits from "Oprah" and the fact that the two new shows won't kick in until the fall.

As for further growth, Haimovitz said there are plans for an aggressive acquisition campaign, which could include expanding into cable and overseas media.

"The proof to our critics," he said, "will be in the pudding."

Indeed, King World in recent months has been expanding its production lineup beyond the bread-and-butter game and talk shows.

In December, it made a deal with Universal Studios Inc. to develop two "Little Rascals" feature films in association with Turner Entertainment Co.

It also cut a deal with veteran producers Merrill Karpf and Donna Ebbs to co-produce made-for-TV movies. Earlier in 1997, King World made a TV movie deal with Barbra Streisand's Barwood Films to co-produce made-for-TV movies.

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