Steven J. Ross, chairman of Warner Communications Inc., appears to be caught between two partners -- one vying for control of his company and one trying to sell part of it.
Chris-Craft Industries Inc., the white knight that rescued Warner last year from a hostile takeover attempt, has boosted its stake in Warner and has tried to increase its representation on Warner's board of directors.
Meanwhile, American Express Co. wants Warner to agree to sell their jointly owned cable company to Time Inc. and Tele-Communications Inc. for $1.35 billion.
Ross wants to sever his ties with Chris-Craft and hold on to Warner-Amex Cable Communications Inc., the nation's sixth largest cable-television network, according to Wall Street analysts monitoring the complicated situation.
His partners appear to have other ideas, and communication industry analysts are not sure how Ross will break free of either Chris-Craft Chairman Herbert Siegel or American Express Chairman James D. Robinson III.
"It's a standoff," said Fred Anschel, an analyst with Dean Witter Reynolds Inc. "Siegel wants to buy out Ross and Ross wants to buy out Siegel, and neither wants to sell out to the other. Meanwhile, Warner-Amex is the catalyst that may force someone's hand."
Two weeks ago, American Express said it was "favorably disposed" to the sale of Warner-Amex Cable, which had a pretax loss of about $94 million last year, to Time and Tele-Communications.
But the terms of the Warner-Amex partnership agreement prevent either party from unilaterally selling its share, and neither has taken the necessary steps toward accepting the offer.
American Express will not say why it has not acted on the offer, and Warner says it has not formally received the offer, which is good for 90 days after it was announced, June 11.
Under the partnership agreement, American Express must offer to buy Warner's 50 percent share, or offer to sell its own half, before the whole cable company can be sold to a third party. Warner is under the same obligation. Neither American Express nor Warner "has pulled the trigger," said Gayla Sangallo, an American Express spokeswoman.
Warner-Amex is trying to stay clear of the conflict, and has no comment, said a spokesman for the cable company's chairman, Drew Lewis, the former secretary of transportation.
Time and Tele-Communications at first offered $750 million in cash plus the assumption of Warner-Amex's debt, estimated to be about $550 million. On June 11, they upped the bid to $850 million in cash and the assumption of $500 million in debt, plus the possibility of some of the proceeds from the expected sale of Warner-Amex's share of the cable TV programming services Showtime/The Movie Channel and MTV music television.
Siegel would not comment yesterday, but is believed to favor the Time/Tele-Communications offer.
Warner turned to Chris-Craft last year for help in fighting off a hostile takeover by Australian media baron Rupert Murdoch. Chris-Craft has since boosted its stake in Warner to 29.4 percent, according to a filing last week with the Securities and Exchange Commission.
Chris-Craft now has three seats on Warner's 14-member board, and recently broke off negotiations with Warner about gaining additional representation. Several Wall Street observers say there is a good possibility of a proxy contest.
The SEC filing reiterated Chris-Craft's intention to consider a variety of options, including a tender or exchange offer for Warner's shares.
Although Siegel may plan on gaining more influence at Warner, a takeover attempt might be too costly to make economic sense, Anschel said, estimating that Siegel would have to offer $37 to $39 a share. Warner closed unchanged yesterday at 30 3/8 on 444,000 shares.
"Nobody likes the status quo, but nobody has a way out," Anschel said, adding that the solution may lie in the hands of unknown parties now watching the conflict from the sidelines. "It's totally unpredictable."