CBS Inc. holds its annual meeting in Chicago today before an avid nationwide audience and amid continuing rumors that the corporation is about to become the target of a hostile takeover bid.
The most persistent rumor on Wall Street yesterday was that E. F. Hutton is raising money for a hostile takeover attempt by broadcasting magnate Ted Turner. Neither Turner nor Hutton would confirm those rumors. CBS repeatedly has said it would vigorously oppose any hostile takeover bid.
Despite skepticism among investment bankers and Wall Street analysts about the ability of the Turner-Hutton team to raise the billions of dollars it would take to acquire control of the company, CBS stock yesterday soared 6 5/8 to close at 115 7/8, after rising 5 1/2 points Monday on similar speculation. CBS traded at a new high of 118 yesterday, about 20 points higher than its closing price last Wednesday.
Wall Street arbitrageur Ivan F. Boesky, who recently purchased 8.7 percent of CBS stock for $247 million, or an average price of $95.50 a share, continues to be at the center of speculation regarding CBS. In the past, Boesky has purchased significant stakes in companies that are takeover targets and sold his stock for enormous profits.
CBS filed a lawsuit against Boesky last week, claiming that he illegally financed his purchase of CBS shares by borrowing 100 percent of the money to make the purchase, in violation of a federal regulation that allows an investor to borrow no more than 50 percent of the purchase price of stock. One unconfirmed report circulating among Wall Street analysts yesterday was that Boesky has been trying to increase the value of his 8.7 percent block of stock by creating the impression in the financial press that a takeover bid for CBS is imminent.
CBS has been the target of takeover rumors since Jan. 10 when a conservative group supported by Sen. Jesse Helms (R-N.C.) filed papers with the Securities and Exchange Commission indicating that it would encourage conservatives to purchase CBS stock. The group said its strategy was to organize a large group of individual stockholders to influence network news coverage at CBS, which the group believes has a "liberal bias."
The Washington Post reported on Feb. 17, when CBS stock was 79 5/8, that Wall Street analysts believed the biggest risk to CBS was not that the Helms-supported group would be able to buy enough stock to control the company, but that some other party would make a bid for CBS during the turmoil. The speculation surrounding CBS increased following the announcement on March 18 that Capital Cities Communications Inc. had agreed to acquire American Broadcasting Companies Inc. for more than $3.5 billion.
Several other recent buyouts of media companies have added to speculation that CBS might become the second major network to change hands. In addition, a decision by the Federal Communications Commission last Thursday not to intervene in a proxy fight involving Storer Communications Inc. supported recent reports that the FCC does not plan to block hostile takeover attempts.
The founders of Fairness in Media, the conservative group supported by Helms, said yesterday they will attend the CBS annual meeting.
R. E. Carter Wrenn, a cofounder of FIM and executive director and treasurer of the National Congressional Club, a political action committee that supports conservative candidates, will attend the meeting. Also attending will be FIM co-founder Thomas F. Ellis, the chief strategist behind Helms' rise to power. Ellis is chairman of the National Congressional Club.
FIM's unprecedented effort to influence CBS has proved to be a gold mine of free publicity for Helms, who has piggybacked on extensive press coverage of both corporate takeovers and legal libel battles between public figures and the media. The Washington Post reported previously that Turner told lawyers for CBS that he has held discussions with both Helms and FIM about launching a joint takeover bid for CBS.