2 big TBS stockholders said to consider a breakup plan


Shares of Turner Broadcasting System Inc. jumped yesterday on a report that two big shareholders, Time Warner Inc. and Tele-Communications Inc., were considering breaking up the company and buying out its chairman, Ted Turner. The stock retreated later in the day.

A spokesman at Turner Broadcasting had no comment on the report, which appeared in the Wall Street Journal. But Mr. Turner has been exploring a number of options for the company's future, an executive close to Mr. Turner said.

There has been speculation on Wall Street that Turner Broadcasting is talking with Paramount Communications, Capital Cities/ABC and other media companies.

Turner Broadcasting's Class A shares were up more than $2 yesterday, before losing ground to close 75 cents higher, at $23.50; Class B shares rose as much as $2 before closing up 62.5 cents, at $23.125.

Dennis Leibowitz, a media industry analyst at Donaldson, Lufkin & Jenrette, said the market's reaction indicated three possibilities: that a deal was not far along, that the speculated price of the deal was not high enough or that investors were skeptical that a deal was likely.

He and other analysts said Turner Broadcasting's stock was already trading at a relatively high multiple of cash flow. If the entire company were publicly traded, it would be worth $6 billion. Turner Broadcasting has $2 billion in debt.

Although the price may be high, Time Warner, which owns more than 18 percent of the company, and Tele-Communications, which holds a 22 percent stake, have some strategic motivations for wanting a change in the structure of Turner Broadcasting. Time Warner, for example, is likely to be interested in the Cable News Network. But Time Warner's stake is worth $1.6 billion, and Mr. Leibowitz estimates that CNN is worth $3 billion.

Mr. Turner himself has periodically sought a merger or an alliance with a media company that would give him more power than he has under the current structure. Tele-Communications and Time Warner can effectively block Mr. Turner, who owns 37 percent of the company but has 57 percent voting control.

One media executive noted that with recent moves by the Federal Communications Commission to regulate cable TV operators, this is an unlikely time for a deal that would greatly increase the power of the two largest U.S. cable operators.

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