The restructuring of CBS Inc. under the direction of Chief Executive Officer Laurence A. Tisch continued yesterday as the company announced it has agreed to sell its magazine division for $650 million to the division's current management.

For CBS, the sale of the magazines is the latest in a series of sales that will prune the company back to its broadcasting and recorded-music operations. There had been speculation about the sale of the magazine division, and the phasing out of the CBS publishing group, since the company sold its textbook and educational publishing businesses last year.

The management group buying the magazines is led by CBS publishing division President Peter G. Diamandis. The buyers have secured financing through Prudential Insurance Co. of America.

The CBS magazine group has 17 publications, including such well-known titles as Road & Track, Car and Driver, Field & Stream, Woman's Day, Modern Bride, Popular Photography and Yachting.

The CBS magazines also include American Photographer, Audio, Backpacker, Boating, Cycle, Cycle World, Flying, Home Mechanix, Skiing/STN, and Stereo Review.

"It never fit Tisch's view of CBS," said Drexel Burnham Lambert Inc. analyst John Reidy.

Fred J. Meyer, CBS' senior vice president-finance, said yesterday the company expects to report an after-tax gain of about $200 million from the sale of the magazines. The company had been criticized for paying too high a price in 1985 when it purchased 12 of the magazines from Ziff-Davis for $362.5 million. CBS will continue to pursue a lawsuit against Ziff-Davis alleging it was misled about the true value of the magazines.

Be selling divisions and cutting its staff, CBS will reduce its work force from about 16,000 a year ago to 11,300 by the time the magazine deal is completed, said CBS spokesman George Schweitzer.

The cuts and asset sales have accelerated since Tisch assumed control of the company in September. He controls nearly 25 percent of CBS stock, which closed at $181.50 a share yesterday, up $2.

When the transaction is completed, CBS will have about $1.6 billion in cash to use for acquisitions.

The company has repeatedly said it would like to buy television stations but only if it can negotiate deals in the right markets and at the right prices.

Yesterday's announcement rekindled speculation that CBS might sell its record division and leave the company only in broadcasting. Record division President Walter R. Yetnikoff has attempted unsuccessfully to buy the group, and CBS sources expect the sale of the magazines to spark his interest in trying again.

Unlike the magazine group, which made a small profit last year -- $13.9 million in operating profits out of $435.3 million in CBS earnings -- the records group produced $162.1 million in operating profits.

While the television network business has been relatively weak, the records group has posted record earnings increases, and several CBS directors are believed to be interested in keeping the business as a buffer to the cyclical broadcasting operations.

The $650 million price for the magazine division, a little more than 13 times expected cash flow this year, is in line with other magazine deals, according to C.J. Lawrence media analyst Peter Appert.

"The real question is whether they are planning to get rid of records and what they are going to do with all of that cash," Appert said. "The question is at what price does Mr. Tisch become responsive" to selling the record division.

Diamandis, the 55-year-old CBS publishing executive who is heading the buyout group, said the magazine deal was driven by the fear that CBS would sell the operations to somebody else.

CBS never publicly put the magazine division up for sale, but Tisch had received several offers. The company responded quickly to the $650 million proposal submitted by Diamandis.

Tisch presented it to the CBS board Wednesday and then called Diamandis at 2 p.m. that day to tell him the deal was his if he could get it closed quickly.

Diamandis said the contract was negotiated with the involvement of 37 people, including 14 lawyers, who completed their work at 5 a.m. Sunday morning.

Diamandis has worked for CBS publishing for five years. He joined the company as publisher of Woman's Day and became president of the publishing division 18 months later.

He said the deal marks a breakthough for Prudential in the field of merchant banking since the giant insurer is providing all of the buyout financing through its own funds.

Prudential board approval is needed before the deal can be completed, Diamandis said.

"I am genuinely thrilled," Diamandis said.

"Having done what I have done in my life, wandering around this town as an employe and making a lot of money for a lot of companies, it seems at this point in my life it is the thing to do. Despite my fatigue I am euphoric."