Continuing to surge on speculation about a takeover of the media company, shares of CBS Inc. on Friday rose another $3.125 to close at $108.75 in New York composite trading, as 653,300 shares exchanged hands.
In the past two weeks, the price of CBS stock has risen about $20 per share.
Wall Street professionals attributed the run-up partially to investors' perceptions that broadcast networks are more vulnerable to takeover now than at any time in the past because of liberalized rules on radio and TV station ownership adopted by the Federal Communications Commission early this year.
That notion gained substantial credence Monday when American Broadcasting Cos. agreed to be acquired by Capital Cities Communications Inc., the first time one of the big three TV networks has changed ownership.
Networks More Desirable
In January, the FCC changed its rules to permit a single owner to hold up to 12 TV and 24 radio stations, provided those outlets do not reach more than 25% of the nation's homes. Previously, a single owner could hold no more than seven TV and 14 radio stations.
Analysts believe that change makes the networks, which already own some of the most valuable broadcast outlets, even more desirable as takeover targets.
RCA Corp., owner of the NBC television network, was also the focus of heavy trading this week, gaining $4.875 for the week to close at $42.875 on Friday, with 5.9 million shares having changed hands since Monday.
"Most people had assumed that the FCC, Congress and the Department of Justice would be so involved (in a network takeover) that it might be a year (before any takeover move would be made)," said John Bauer, a broadcasting analyst for Oppenheimer & Co. in New York. "Now the first hurdle has been crossed, with a friendly merger (of ABC). The next question: How active a role would (the regulators) take in an unfriendly takeover?"
Turner May Be Interested
CBS has attracted particular interest because of a well-publicized assault by Fairness in Media, a North-Carolina group affiliated with Sen. Jesse Helms (R-N.C.) and established with the stated intention of gaining control of enough CBS stock to influence the network's news and programming policies. Cable-TV entrepreneur Ted Turner has reportedly acknowledged that he discussed joining the Helms group in making a bid.
Stock-market analysts, however, doubt that either, whether separately or in concert, could muster the financial backing needed for a serious bid.
Also spurring trading in CBS this week were reports of large holdings of the stock, perhaps more than 5%, by Ivan F. Boesky, a prominent arbitrageur who buys and sells stocks that are the subject of takeover speculation. Boesky, through a spokesman, declined to comment and had not disclosed any such holdings to the Securities and Exchange Commission as of Friday evening.
Large holdings by Boesky and other arbitrageurs might further excite trading by creating a concentrated block of CBS stock available to anyone planning to bid for the company.
In addition, Wall Street investors are aware that there are no controlling blocks of CBS stock in anyone's hands. The largest individual block, held by company founder William S. Paley, is just under 5%.
Price Nearing a Ceiling
"There is an opportunity for an outsider to come in and control CBS, just as there was for ABC," said Sharon Armbrust, an analyst at the firm of Paul Kagan Associates, which specializes in evaluating broadcast properties. "When you have this fed by the activities of the Helms group and rumors of Turner's interest, the market bids the stock up."
A CBS spokesman Friday characterized the trading this week strictly as market activity. "There are no corporate developments that explain it," said the spokesman, Anne Lozzatto. She said the company is unaware of any "unusual purchases" or accumulations approaching 5%.
Many analysts believe that the price of CBS is nearing a ceiling if no serious takeover threat surfaces. At $125 per share, Bauer argues, the stock would be trading at a 30% discount to its liquidation value of about $176 per share, a historic high.
"At $125, I'd be bailing out," he said, "because there, even if there were a takeover, the (potential for a higher bid) would be pretty limited."
The Soaring Price of CBS Shares
Days in NYSE Composite March, closing volume of CBS 1985 price shares traded 8 $85.75 101,100 11 84.75 54,100 12 84.50 132,000 13 82.875 77,500 14 86.375 301,300 15 88.50 265,400 18 94.50 1,043,500 19 98.00 877,500 20 106.25 1,306,700 21 105.625 1,154,300 22 108.75 653,300