As ABC Sports announcer Al Michaels continued an arbitration hearing in Los Angeles contending the network breached his contract, sources said that his representatives and the network are discussing a settlement that would keep Michaels at ABC and make him the highest-paid in sports television.

Industry sources said yesterday that an agreement was imminent, but a source close to Michaels said, "Nothing has been done. There are conversations taking place, but no agreement has been reached." The source would not say when, if at all, an agreement would be made.

Attorneys for Michaels filed for arbitration in early April. They claimed ABC Sports breached the contract by suspending him because he hired his daughter as a messenger for the network during the 1989 World Series and further breached the contract by withholding his salary during the suspension.

The closed arbitration hearing, which began Monday in Los Angeles, is not expected to be completed until at least the end of the week. The arbitrator's decision could take two months, sources have indicated.

Art Kaminsky, Michaels's New York-based agent, was not in his office yesterday, and an ABC spokesman said he was unaware of the talks. Michaels also could not be reached for comment.

Speculation has swirled in the television industry since April 1 -- when CBS fired 15-year network veteran Brent Musburger -- that Michaels wanted to move to that network as Musburger's replacement as lead play-by-play announcer on its Major League Baseball coverage. A month later, Musburger signed with ABC. Dennis Swanson, president of ABC Sports, said at the time the network had room for the nation's two highest-paid sportscasters.

Each makes more than $1.8 million annually. Musburger signed a six-year deal; Michaels, who won an Emmy Award last season for coverage of the earthquake in the San Francisco Bay Area during the World Series, has three years remaining on his contract.

Musburger makes his ABC debut later this month on a two-hour prime time special.

A source close to Musburger said his ABC deal was completed without consideration of Michaels's status. Musburger will team with former Philadelphia Eagles coach Dick Vermeil as the number two crew on college football behind Keith Jackson and Bob Griese, and with former N.C. State basketball coach Jim Valvano as the number two crew behind Keith Jackson and Dick Vitale on college basketball.