Broadcasting magnate Ted Turner has told lawyers for CBS that he has had extensive discussions with Sen. Jesse Helms (R-N.C.) and the conservative Fairness in Media group about launching a bid for control of the network, sources familiar with a deposition by Turner said today.
Turner, who answered questions posed by CBS lawyers for several hours on Monday, said in the deposition that his discussions with Helms and FIM included proposals about how the parties might cooperate in a formal bid for CBS and how they might change the network's programming if the bid succeeded, sources said. FIM, which is supported by Helms, has said it will try to gain financial control of CBS to end what it calls the network's liberal bias.
Sources said Turner refused to say if he plans to launch a takeover bid for CBS on his own. Turner's lawyers advised him throughout the deposition to restrict his comments to his relationship with Helms and FIM, sources said.
Last week, CBS Chairman Thomas H. Wyman said there was "no financial substance" to reports that Turner, who owns Cable News Network, might launch a bid for CBS. Wyman also reiterated that CBS vigorously would oppose any effort by FIM to gain control of the network.
While spokesmen for both CBS and Turner refused to comment on the deposition, which is not yet a public document, sources on both sides confirmed privately that Turner had disclosed details of his relationship with Helms and FIM to CBS lawyers.
On Monday, the same day Turner was deposed by CBS lawyers eager to learn if he plans to make a takeover offer for CBS, Capital Cities Communications Inc. announced it had agreed to acquire American Broadcasting Companies Inc. for about $3.5 billion, in a friendly takeover that would transfer ownership of a television network for the first time.
In response to that announcement, broadcasting and media stock prices skyrocketed on Wall Street today.
Turner answered questions from CBS lawyers in connection with a CBS suit against FIM. The suit charges FIM with violations of federal securities laws, improper political activities by tax-exempt organizations and illegal corporate political contributions, all in connection with FIM's campaign to take over CBS.
Turner, who has said in the past he wants to acquire one of the networks, sent a representative to Washington late last month to meet with Federal Communications Commission officials in an attempt to determine whether the commission would block a hostile takeover bid for one of the networks.
Prior to Turner's deposition, sources close to Turner have said that he is not allied with the politically conservative FIM group.
The public battle between CBS and FIM officially began Jan. 10 when FIM filed papers with the Securities and Exchange Commission indicating that it would encourage conservatives to purchase CBS stock as part of an effort to try to change what it called the network's "liberal bias." The SEC filing said FIM was formed by three North Carolina lawyers, including R. E. Carter Wrenn, executive director of the National Congressional Club, a political action committee that supports conservative candidates for public office.
The networks, all of which own profitable affiliated television stations, have been mentioned as potential takeover targets for months because the value of their assets is greater than the market value of their outstanding stock.
Another factor that is fueling the Wall Street takeover fever for broadcasting companies is a change in federal rules next month that will ease some restrictions on ownership of media properties. A single broadcaster will be allowed to own up to 12 television stations starting April 1, while current law restricts ownership to seven stations.
Wall Street experts said today there is a possibility that someone could make a competing bid for ABC at a price higher than the $118 a share in cash, plus at least $3 in warrants, offered by Capital Cities. There are no agreements between ABC and Capital Cities that would make it impossible or financially impractical for this to occur, Wall Street experts said.
But even as some aggressive investment bankers were busy today trying to derail the friendly Capital Cities-ABC combination by putting together groups interested in making higher bids for ABC, others were claiming that a hostile raider had only a small chance of succeeding.
They said any new bidder for ABC not only would have to offer a higher price but also would most likely need the support of ABC directors to succeed.
Broadcasting executives said it would take more than a year to complete the ABC-Capital Cities combination, adding that a hostile bidder would have to be prepared for a long and costly fight, since ABC could bleed an unwanted raider by dragging out legal proceedings concerning transfer of broadcast licenses for years.
Some Wall Street experts said the increased attention on the networks as a result of the Capital Cities-ABC combination makes CBS more vulnerable to a takeover. They also said unusually heavy trading volume by speculators had left CBS more vulnerable to a takeover because more of its stock is now in the "hot hands" of arbitragers and others who are looking for quick profits.
But CBS Chairman Wyman is popular among Wall Street analysts who believe the company is performing well under his leadership.
Wyman repeatedly has made it clear he wants to remain in top job at CBS and will use the company's extensive financial and legal resources to oppose a takeover bid.
One investment banker said that with egos on the line and takeover fever in the air, CBS might surprise everybody by making a broadcasting acquisition to increase the number of television stations it owns.
CBS officials and representatives of Ted Turner refused to comment on Turner's deposition, which is not yet a public document.