Ted Turner received approval from the Securities and Exchange Commission yesterday to proceed with his hostile bid to acquire CBS Inc., but the Atlanta broadcaster said he does not intend to purchase any CBS stock until he receives Federal Communications Commission approval.
Turner said he will mail the prospectus describing his offer to CBS stockholders soon. But he is not likely to receive FCC approval to proceed until sometime this fall, at the earliest.
"We, of course, are pleased that we are now in a position to commence our exchange offer," Turner said yesterday. "We look forward to the opportunity of presenting our offer to CBS shareholders and letting them determine the future course of their company."
Turner's takeover bid includes no cash. Instead, he offers CBS stockholders a complex package, including high-yielding, risky securities known as junk bonds, in exchange for their stock. Turner's proposal includes a plan to help finance the proposed takeover by selling many of CBS' assets, including the company's publishing and records operations.
CBS is vigorously opposing Turner's offer and has said the proposal would send the company into a "death spiral" by burdening it with enormous interest payments. But earlier this week, Turner filed a petition with the FCC in which he said he would be able to sell enough assets to raise the cash needed to operate the CBS network for nearly a decade.
CBS will file papers with the FCC Friday challenging Turner's financial projections. Then the FCC will decide whether it has enough information to review Turner's request for approval to take control of broadcast licenses for CBS' radio and television stations. CBS is trying to convince the FCC that the commission ought to hold lengthy "evidentiary" hearings before it rules, a process that Turner says is designed to delay his takeover bid. Turner also must receive the approval of the antitrust division of the Justice Department.
Several knowledgeable investment bankers have said they believe Turner's takeover bid will force CBS to undergo a financial restructuring to increase the value of its stock and defeat his proposal. Wall Street analysts estimate that Turner's bid is worth about $150 a share. CBS stock closed Friday at 121, up 2 1/8. If CBS repurchased some shares at a premium to the market rate and diminished the difference between the value of Turner's bid and its stock price, his offer would not be as attractive to CBS stockholders.
CBS has been the target of takeover speculation since a conservative group backed by Sen. Jesse Helms (R-N.C.) and Rep. Phil Crane (R-Ill.) said in January that it wanted to acquire control of the company to end what it believes is a "liberal bias" in CBS network news coverage.