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The success of Turner's offer, though, will depend more on money than on moral issues. Under his plan, stock owners who trade in their CBS holdings for Turner certificates could earn a handsome $21.70 a share in annual interest and dividends, compared with $3 currently. Says Robert Ladd, a media analyst at Chicago's Duff & Phelps investment firm: "I may be in the minority, but it looks like a pretty good deal."
While Turner values this offer at $175 a share, some Wall Street analysts put its worth as low as $125. They believe that many investors may be unwilling to put faith in the unusual flurry of paper that Turner plans to issue. This includes low-rated, high-yielding certificates called junk bonds, which are largely backed by the expectations of future profits from the merged company. Said Lee Wilder, vice president of Atlanta's Robinson Humphrey investment firm: "The only thing Turner didn't throw into the deal were the bamboo steamers and the Ginsu knives," a reference to the products frequently hawked on WTBS. Concurred Edward Atorino, an analyst with New York City's Smith Barney: "It's all paper, nothing but paper. There's no money." Uncertain of the deal's value, investors pushed CBS stock up only $3.25 last week, to $107.
Turner Broadcasting hopes to help pay for the merger with CBS's own money, partly by breaking off chunks of the company after the deal is consummated. Turner said last week he would sell all 13 of the radio stations CBS owns and one of its five TV stations, in part to comply with Federal Communications Commission rules. After that, he might consider disposing of CBS/Records Group, which brings in 26% of total revenues, or the company's publishing division, which accounts for 13% of revenues.
Although CBS has ten days to consider whether it will accept or fight the deal, a fierce battle is certain. The company is expected to produce an impressive arsenal of legal and legislative weapons. Wyman has already secured a $1.5 billion credit line for the possible purchase of another company, which would make it more difficult for Turner to swallow CBS. The company is also rumored to be considering a defensive merger with General Electric or a similar firm.
The notion of Ted Turner as a boss riled old hands at CBS News. "I have yet to come across anybody at CBS News who has the slightest desire to work for Turner," said 60 Minutes Correspondent Mike Wallace. "No one takes him seriously." Walter Cronkite said that he "would be devastated" if CBS were taken over, adding, "CBS News has achieved the greatest credibility. It would be terrible to change all that."