MCI Communications Corp. yesterday denied that the company has agreed to back Cable News Network founder Ted Turner in a hostile takeover bid for CBS Inc.
MCI spokesman Gary Tobin said there is no truth to a report published yesterday that said MCI has agreed to give Turner $50 million to help him make a bid for CBS. Tobin said MCI recently attended a meeting in New York with investment bankers "where the topic of CBS came up," but he added that MCI officials left the meeting "having made no commitment and having reached no agreement."
Meanwhile, former Treasury secretary William Simon would not comment on the same report, which said that he also agreed to back Turner by giving him $50 million to help finance a hostile bid for CBS. Simon is a partner in Wesray Corp., a highly successful New Jersey-based investment banking firm.
Wall Street analysts and CBS officials both said yesterday that they believe that reports yesterday of an impending bid for CBS by a group organized by Turner were, in reality, rumors planted by parties who want to put pressure on CBS management.
CBS management has been fighting for its independence since Jan. 10, when a conservative group supported by Sen. Jesse Helms (R- N.C.) said it would try to gain control of the network to eliminate what it believes is a "liberal bias" in the network's news coverage. The conservative Fairness in Media group said last week it would not launch a proxy fight at the CBS annual meeting on April 17, but FIM officials said the group was not ending its fight to gain control of the company.
"There is no substance to a report in The New York Times that Turner was organizing a syndicate financially capable of taking over CBS," said CBS Vice President William Lilley III. "Ted Turner would like to take over CBS, and we know he doesn't have the resources."
CBS Chairman Thomas H. Wyman has stated repeatedly that the company will vigorously oppose any hostile takeover bid. Analysts said yesterday that Wyman remains committed to fighting such a bid.
"Wyman is a helluva lot more lethal than anyone understands," said First Boston Corp. analyst Rich MacDonald. "I would not want to go to war with him. The man takes no prisoners. I think his recent comments were directed to warn others that if they were going to take him on, it would be mutually assured destruction."
MacDonald said reports about Turner making a joint bid for CBS with MCI and Simon were "more smoke than substance."
Turner has said he would like to buy CBS but does not have the money. He has held discussions with Helms and others about making a joint bid for control of the network, but apparently has not been able to obtain financing.
Meanwhile, sources said that Wall Street arbitrageur Ivan F. Boesky, who disclosed earlier this week that he owns 8.7 percent of CBS, contacted several investment banking firms yesterday in an effort to drum up support for a CBS takeover bid. Sources said Boesky contacted First Boston Corp., Prudential-Bache Securities, and Shearson Lehman Brothers, but there was no indication that he was having any success generating support for a hostile CBS bid.
CBS officials said earlier this week they refused Boesky's request for a meeting with management and also refused to purchase his CBS stock at the market price. Boesky said he wants the company to take steps that would increase the price of CBS stock, which many experts believe is well below the value of the company's assets.
CBS stock closed at 109 5/8 yesterday, up 2 7/8.
Speculation that CBS might be sold has increased since Capital Cities Communications Inc. announced on March 18 that it has agreed to acquire one of the other major networks, American Broadcasting Companies Inc., for more than $3.5 billion.