Westinghouse to buy CBS for $5.4 billion

THE BALTIMORE SUN

NEW YORK -- Westinghouse Electric Corp. said yesterday that it will buy CBS Inc. for $5.4 billion, or $81 a share, marking the second television-network takeover in two days.

The move comes a day after Walt Disney Co. shocked investors by announcing the acquisition of Capital Cities/ABC Inc., owner of rival television network ABC, for $19 billion.

Although paling in comparison, Westinghouse's acquisition creates a broadcasting juggernaut that will own television and radio stations that reach about one-third of U.S. households.

"We are broadcasters," said Michael H. Jordan, chairman and chief executive of Pittsburgh-based Westinghouse, at a news conference at the Waldorf-Astoria Hotel. "We are really out to create the premiere broadcast company . . . around the world. This is only the first chapter of this expansion."

The fate of Westinghouse's Electronic Systems Group, which is based in Linthicum, remains unclear. Mr. Jordan would not say if the unit will be sold to help pay for CBS, as some analysts have speculated.

Mr. Jordan will become chairman and CEO of the new company, Westinghouse/CBS, and Laurence A. Tisch, chairman and chief executive of CBS, is expected to retire upon completion of the deal.

Mr. Tisch said the combination will create a company with "vast potential for making history.

"I think this is a very excellent day for the communications industry," he said. "I for one believe CBS will be in very capable hands."

Analysts expect that Mr. Jordan will have to sell nonbroadcasting divisions to finance the deal. The company's other operations include radar systems, which are made by Electronic Systems Group, steam turbine generators and refrigeration equipment.

"We see no viable way for Westinghouse to begin doing it [reducing debt] without asset sales," said Jonas Stiklorius, a research analyst with NatWest Securities Corp. "They have said in the past that any asset at the right price could be sold."

Mr. Jordan said the company would look to sell anywhere from $1.5 billion to $2 billion in assets over the next year to year-and-a-half to pay down its debt.

"We are looking at all our strategic options," he said. He declined to say what units are under consideration for sale.

When asked if jobs would be cut at Electronic Systems Group, which employs about 9,000 workers, Mr. Jordan said any reduction in the work force "would be designed to strengthen that business."

Westinghouse's acquisition is being financed by Chemical Bank and J. P. Morgan, which have each committed to lend $1 billion and have agreed to arrange the remainder of the financing.

The agreement is subject to approval from CBS shareholders and the Federal Communications Commission. Westinghouse expects to receive approvals or waivers from the FCC and complete the transaction by the end of the year or early 1995.

Under the terms of the agreement, which has been approved by directors of both companies, Westinghouse will acquire all of the outstanding shares of CBS for $81 a share in cash.

In addition, CBS shareholders will receive a special payment based on the length of time it takes to complete the deal.

When the deal is completed, the new company will boast:

* The nation's largest television station group with 15 stations, including Baltimore's CBS affiliate, WJZ, covering nearly one-third of the nation;

* The country's largest radio station group with 39 stations covering about 35% of the nation;

* The CBS television network, which airs such programs as "60 Minutes," "Picket Fences" and the "Late Show with David Letterman," and has more than 200 affiliated stations;

* And the CBS radio network, which has more than 585 radio affiliates, reaching nearly 100 percent of U.S. households.

Both companies have had their share of problems.

Westinghouse lost more than $2.8 billion from 1991 to 1993 and it laid off thousands of workers.

It also carries a heavy debt burden of about $3.3 billion.

In the meantime, CBS has languished behind rivals NBC and ABC in prime-time ratings.

Yesterday, Westinghouse shares closed at $14.875, up $1.25; CBS closed at $77.75, unchanged.

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