Atlanta broadcaster Ted Turner asked the Federal Communications Commission yesterday to stop CBS Inc. from proceeding with a plan to buy back $954.8 million of its stock, saying the plan violates the law by transferring authority to make important decisions from the company's stockholders to its board of directors without FCC approval.
In a separate "Emergency Petition for Expedited Relief," Turner also asked the FCC yesterday to accelerate its review of his hostile bid to acquire the company.
Turner, who needs FCC approval to proceed with his bid to acquire CBS, asked the commission yesterday to approve his application by July 15, so that CBS stockholders may have a "level playing field" on which to compare the merits of his offer with the CBS stock buyback plan. Turner argued that CBS has "blatantly attempted to exploit" the FCC process to "tilt the playing field so that its version of a leveraged stock purcase is the only game that will ever be played."
Turner's FCC application was not expected to be approved before sometime this fall. However, Turner is arguing that because CBS announced a competing recapitalization plan this week, the FCC should grant his application expedited approval so that CBS stockholders will be able to compare the two proposals concurrently. In the event the FCC is not willing to give Turner's initial "long form" application expedited treatment, the Atlanta broadcaster asked for approval of a new "short form" transfer application that he filed yesterday.
"CBS' proposal involves a transfer of the major decision-making power of CBS from the shareholders to the CBS board and a new select group of preferred shareholders," Turner said yesterday. "We believe that the FCC should act promptly to prevent this transfer of control from occurring without prior FCC approval. In addition, in view of CBS' action, the FCC should accelerate its approval of my proposal so that CBS shareholders can consider our offer at the same time they are considering CBS' self tender."
On Wednesday, CBS said it will offer $150 a share, made up of $40 in cash and $110 in notes, for 21 percent of its outstanding common stock. CBS said the recapitalization will include the sale of $300 million of the company's assets within a year, a $20 million reduction of annual corporate overhead expenses by 1987 and the private sale of $123 million of a new issue of preferred stock to five corporations.
The CBS plan includes several provisions that block Turner's current bid for the company by restricting the amount of debt the company can have on its balance sheet. This would block Turner's highly leveraged bid for the company and any other noncash bid that does not have the support of the company's directors. A leveraged bid is one financed by debt that would be repaid by the assets or earnings of the takeover target.
Turner's takeover bid, worth about $150 a share, according to Wall Street analysts, would be blocked by the CBS plan because it includes no cash and does not have the support of the company's directors.
Turner is offering CBS stockholders a complex package of securities, including high-yielding securities known as junk bonds, in exchange for their stock. His proposal includes a plan to sell many of CBS' businesses to help finance the takeover. Turner has said he will not purchase any CBS shares until he receives FCC approval.
"CBS' July 3 offer, combined with the antitakeover measures adopted by the CBS board earlier this year, effectively transforms CBS from a licensee controlled by its diverse shareholders . . . into a licensee in which the control of CBS' existing shareholders on major issues is diluted into irrelevancy," Turner's FCC filing said.
"Shareholders can no longer call meetings to accept attractive merger opportunities, such as ours , and even if they could, one of five new preferred shareholders could veto it anyway. Having eliminated the viability of such a merger, the CBS board is now absolutely immune from the discipline of the marketplace because its shareholders have been made impotent and cannot exercise that discipline."
Turner asked the FCC to require CBS to file transfer-of-control applications in connection with its stock buyback plan. If the FCC rules in Turner's favor, it could delay the CBS plan, which was announced Wednesday. Turner also is trying to block the CBS proposal in the Georgia courts, where a hearing on the matter is set for July 24.
CBS stock closed at 116 3/8 yesterday, down 2 1/4.