Business Notes: Nov. 25, 1985

CORPORATIONS A Network Draped in Red

For a company that covers the news, CBS has lately been making a remarkable number of headlines on its own. Last week the communications giant closed its toy, computer software and theatrical-film businesses, announced the early retirement of the No. 2 executive in its broadcast group and reported its first quarterly loss ($114.1 million) since the early days of the company in the 1930s.

CBS has been in trouble since the summer, when Atlanta Entrepreneur Ted Turner launched a $5.4 billion takeover bid. The company escaped Turner's clutches by buying back 21% of its stock, but it did that by taking on increased debt, which has forced the firm to cut expenses and trim its staff.

Troubles for CBS may not be over. Wall Streeters suggest that Loew's chairman, Laurence Tisch, who has bought 12% of the company and last week became a member of the firm's board of directors, might try to acquire CBS himself or with some corporate raiders. Says Edward Atorino of Smith Barney: "CBS hoped that bringing this fox into the hen house would keep away other foxes. The trick is not going to work." No one yet knows the plot of the final episode in this CBS series.

Ed O'Geese, a maintenance man for the California Public Utilities Commission, was not pleased last January when he discovered that his grandson Kenneth, 10, had made about 2,000 calls to a sports-trivia number. Kenneth had won a television set in the process, but he had also run up a $1,316 bill in calls to the special number. Extra-charge telephone numbers that begin with 976 are now available in nearly two dozen states. Says O'Geese: "I think it's wrong. They should explain to kids that there is a charge for the service."

About 30 million calls are expected to be made this year in California alone to special numbers that charge anywhere from 50¢ to $2 per call. For the fee, people can hear horoscopes, pornographic tales, children's stories, pop music, news or stock quotes.

Some critics object to the content of the messages, especially the dial-a-porn calls, but others protest that advertisements for the call-in services do not make it clear enough that there is a special charge for the calls. The California Utilities Commission agrees. It has ordered a one-time rebate to consumers who phone the numbers without realizing there is an extra charge.

Any Wall Street trader could make a killing if he got advance notice of the Commerce Department's quarterly estimate of the country's economic growth. On the day it is released, that statistic can send the financial markets into a sharp upward or downward spurt. Thus Government officials became alarmed last July and then again in September when an accurate GNP estimate was circulating among traders the day before its official release. In an effort to find the source of the leak, the Commerce Department has called in the FBI, which last week was giving voluntary lie-detector tests to key employees. More than 15 have submitted to the process, but no suspects have been announced.