Network, Affiliates Tell FCC That Offer Is Financially Unsound : CBS Files Objections to Turner Bid

CBS and a flock of its affiliates told the Federal Communications Commission on Monday that Ted Turner’s bid for the network is financially unsound and threatens to diminish the diversity of television programming as well as competition in the advertising market.

One affiliate executive called Turner “a modern-day ‘Music Man’ peddling some pie-in-the-sky.” Another accused him of “a blatant grab for power, at any cost to the public.”

CBS, more than a score of affiliated radio and television stations, six senators and several church, labor and consumer groups filed petitions opposing Turner’s hostile takeover just hours before the commission’s deadline for comment was to lapse.

Turner, who initially is seeking to gain control of 67% of CBS stock in a bid valued by Wall Street analysts at more than $3 billion, has 10 days to answer his critics. If he succeeds in the first step, he would acquire the remaining CBS stock, bringing the deal to an estimated $4.5 billion.

CBS said the proposal to merge the network with Turner Broadcasting System “is based on a high-risk, junk-bond financial scheme that would burden the merged company with debt and jeopardize the survival of the CBS television network.”

“Because no cash is involved,” the CBS brief said, “$4.5 billion of debt would be added to the CBS books--a 1,300% increase in the amount of long-term debt now carried by CBS.

“In 1986 alone,” the network said, “the costs of servicing the obligations of the merged CBS-TBS entity would be $742.5 million. By 1990, the cost of debt service and preferred stock dividends would increase significantly to $1.04 billion and would go as high as $2.4 billion in 1992.

“Even if TBS were able to meet its debt obligations, this effort clearly would strip the CBS network of funds required for program development and acquisition and all of the other activities and efforts necessary to serve effectively the hundreds of CBS affiliates throughout the country and, more important, the audiences of these stations,” the CBS document said.

The network said the merger would “reduce media diversity in two distinct areas: the production and dissemination of national and international television news, and the distribution of programming over competing broadcast outlets in the Atlanta market,” where Turner’s superstation, WTBS, and Cable News Network are based.

CBS noted that Turner’s plan contemplates melding CBS News and CNN into a single operation and said that would be “an action which would cause the most grievous injury to the public interest in diversity.”

Moreover, the document said, the merger would “result in a substantial lessening of economic competition” in the advertising market, which the Justice Department already has declared highly concentrated.

Six senators, led by Thomas F. Eagleton (D-Mo.), wrote the FCC: “We urge you not to do your big yawn in the Turner-CBS matter. We urge you to recognize that operating a network in the public interest is not like selling electric toasters.”

President C. H. McKeever of WDBJ-TV in Roanoke, Va., called Turner a “modern-day ‘Music Man.’ ”

“Before we buy the instruments and the uniforms, it would be prudent to look at the record. Can no one now taste the irony of a born-again Ted Turner falsely accusing CBS of programming nothing but violence and sleazy programming, when that has been nothing but his modus operandi in Atlanta?” McKeever asked.

McKeever pointed to several recent Turner programs, noting that, on one recent Saturday, “while those awful, sleazy network programmers were running cartoons, the Muppets and science and educational programs like ‘Rubik and the Amazing Cube,’ WTBS, opposite this fare, offered uplifting ‘Wrestling.’ This, as you know, is an extremely honest, nonviolent object lesson in behavior for youngsters.”

WINA radio in Charlottesville, Va., said: “Should Mr. Turner succeed in his blatant grab for power at any cost to the public, he intends to spin off the CBS radio interests as part of his bizarre financial plans. Such a spin-off would either mean the end of the CBS Radio Network or, at the very least, so weaken its ability to report the news . . . as to render it moribund.”

One of the last-minute petitions, that of the American Legal Foundation, supported Turner. But that conservative group warned that it would withdraw its endorsement if he agreed to “racial or sexual quotas” in network hiring.