Wall Street Is Skeptical, but Bid May Fly in Washington : CBS--A Political Edge for Turner?

The word on Wall Street is that Ted Turner faces huge financial obstacles in his effort to capture the CBS broadcasting empire. But along Pennsylvania Avenue, where the last blood in a serious CBS takeover battle probably would be shed, he enjoys a political and legal edge.

Should that edge prove decisive, Turner can thank the Reagan Administration, whose devotion to the rough-and-tumble of the free market seems tailor-made for his attack on the right wing’s favorite media target.

President Reagan’s four years in the White House have erased many of the political and regulatory barriers to Turner’s bid for CBS, Washington communications experts say.

Long-held biases against mergers of competing companies have fallen out of fashion. So has the belief--grounded in a half-century of Federal Communications Commission policy--that broadcast purchases must be minutely scrutinized to ensure that they serve the “public interest.”

Equally important, experts say, the conservative tide has swept away much of the respect--and fear--that politicians once accorded network television.

“CBS has a problem: Nobody likes them,” said David Aylward, a former congressional expert on communications policy and now a private consultant. “When they come here, they can’t say, ‘Hey, friends, someone is beating up on us.’ Very few will listen.”

The effect is to deprive CBS of bureaucratic and political weapons that in years past would have torpedoed a similar buy-out. If the CBS-Turner battle is a struggle for the heart of a powerful national institution, official Washington may well treat it like a contest for control of a shoe company.

“There has never been a hostile takeover of a company holding broadcast licenses--never,” said Jay E. Ricks, a leading Washington communications lawyer. “But anybody who underestimates Ted is probably making a big mistake.”

Lack of staying power thwarted the last network takeover attempt, Howard Hughes’ 1968 offer to buy 35% of American Broadcasting Cos.

Hughes’ bid ended when the FCC decided that the proposed purchase raised “substantial questions” that would require lengthy hearings--and a public appearance by the reclusive Hughes--to resolve. The FCC acted under the 1934 Communications Act, which gives it authority to veto any transfer of a broadcasting license that is not in the public interest.

But observers say the Reagan Administration’s FCC is unlikely to raise such barriers to the Turner bid for CBS. The commission on April 11 declined to require public hearings in a second takeover case, involving Storer Communications, by essentially ruling that a hostile buy-out is a matter for stockholders to decide.

Mark S. Fowler, Reagan’s FCC chairman, “has indicated he’s going to read the Communications Act in such a way as to prevent the commission from inserting itself into these takeovers,” said Harry (Chip) Shooshan, a Washington communications consultant.

Most experts say the major remaining question is whether a Turner-CBS merger would concentrate too much broadcasting power in one company’s hands.

Antitrust regulators in the Justice Department will study the proposed buy-out, but most experts view a challenge as highly unlikely.

The FCC long has barred a single company from owning more than one broadcast network, but the ban has applied only to traditional over-the-air broadcasters. Turner effectively operates not one but three networks: Cable News Network and WTBS, both sold to millions of cable-TV subscribers, and Cable Headline News, which is sold to local TV stations and cable systems nationwide.

Turner proposed Thursday to disband Headline News, the only one of the three supplied to over-the-air stations. While an FCC official said that would satisfy the agency’s requirements, some observers said Turner could face criticism for retaining his cable operations.

“The takeover certainly would reduce diversity and competition in one narrow market, and that’s national television news,” Aylward said. “And that’s the kind of argument that could be pitched to political people, who are sensitized to news.”

William H. Johnson, deputy chief of the FCC’s mass-media bureau, said Thursday that such “generalized arguments” about concentration have rarely been persuasive.

Rep. Al Swift (D-Wash.), a former TV newsman who sits on a House subcommittee dealing with both communications policy and corporate takeovers, said he doubts that Congress will address the Turner bid.

“At what point does the public interest in this come into play?” he said. “When someone buys a few shares? Ten percent? Fifty? It seems the FCC has kind of ducked that, and Congress may very well have to visit it. But will we? I don’t know. Congress’ record in setting communications policy is not very good.”