Plot Problems Cbs Takeover Gossip Abounds

By James Kelly.

If the rumors about a takeover of CBS last week were turned into prime-time fare, the cast would ensure boffo ratings. Here is Ted Turner, the mustachioed buccaneer of the cable airwaves whose passion is to call another network his own. There is Ivan Boesky, a Wall Street wizard who spends millions to make millions. And don't forget Jesse Helms, the conservative North Carolina Senator who has suggested to his constituents that it would be nice if they were Dan Rather's boss.

Turner, whose Atlanta-based broadcasting company owns the Cable News Network, disclosed his designs on CBS in February. But little was known about how he might achieve this until the New York Times reported last week that Turner had lined up support from Financier William Simon, the former Treasury Secretary, and MCI Communications, the long-distance phone company. Simon and MCI reportedly had agreed to chip in a modest $50 million each. MCI Spokesman Gary Tobin denied that his firm had pledged money to Turner, but he acknowledged that the company was sounded out by a third party, whom he would not identify, about a deal. "We are often approached to discuss potential investments," said Tobin. "We listened. We don't have an agreement." Simon refused comment.

The plot thickens. Turner asked Drexel Burnham, the investment banking firm, to arrange financing for a takeover, but it refused. He supposedly also approached Shearson Lehman Brothers about raising money. Officials there declined to say anything, but whisperings grew so loud that the firm put CBS and Turner Broadcasting on its restricted list, which meant that it would offer no stock recommendations on them to customers.

Enter Ivan Boesky, who has amassed an estimated $150 million buying stock during takeover battles and selling out after prices have climbed. He announced he owned an 8.7% stake in CBS. Boesky bought the shares at an average price of $95.50 over the past weeks and became CBS's single biggest stockholder. (Founder William S. Paley owns 6.5%.) According to CBS, Boesky volunteered to sell his interest for $105 a share, but company officials refused the offer.

Enter Senator Helms, who helps pilot a conservative group called Fairness in Media, which launched a campaign in January to buy CBS stock in hopes of changing what it considers to be the network's liberal bias. Fairness in Media obtained a list of stockholders two weeks ago, but the names came too late to wage a proxy fight at the company's annual meeting next week. Turner has met twice with the group's representatives, but the two as yet have not linked forces.

As far as CBS is concerned, the takeover drama should be called Mission: Impossible. Wall Street analysts agree that a hostile assault would cost at least $4 billion, more than Turner seems capable of raising. CBS has bolstered its defenses by eliminating a company bylaw that allowed a minority of shareholders to call special meetings. In addition, the company opened a $1.5 billion line of credit with a consortium of banks; it could use the funds to buy other companies, making it harder for Turner--or anybody--to swallow CBS. The maneuver churned up rumors that CBS might merge with Time Inc. or sell its magazine division to raise cash. CBS denied the gossip, as well as reports of a friendly merger offer by General Electric.

The cloudy takeover talk has been a box-office smash for CBS stockholders. Shares have risen from $88 three weeks ago to $111 last week.

With reporting by Cathy Booth/New York and John E. Yang/Washington