Turner Filing Offers Support for CBS Bid : Tells FCC That Merged Firm Would be Viable

Entrepreneur Ted Turner provided an array of figures Wednesday to support his claim that CBS would remain financially viable following a takeover by his much-smaller Turner Broadcasting System.

In a voluminous filing with the Federal Communications Commission, Turner asserted that a merged CBS-Turner Broadcasting would produce a cash surplus in the first nine years following the takeover even if expenses increased 8% a year during that period.

While the company would post losses until 1989, selling CBS’ non-broadcast properties would help generate a cash surplus that would never dip below $238 million for the first nine years, according to the calculations.

Turner said that his plans to sell the network’s 14 radio stations and its Philadelphia television outlet would actually increase media ownership, thereby furthering an FCC goal.

Call for Hearing

His arguments came in response to CBS’ assertions that Turner’s purchase of the company through issuance of more than $5 billion in high-risk “junk” bonds would soon put the company in danger of default and that Turner would skimp on programming expenditures to save the doomed venture.

CBS called the filing “another Turner rerun--no cash and all junk.” The company noted the wide divergence between its financial calculations and Turner’s and repeated its call for a FCC hearing to review the 2-month-old bid.

With the sale of record, publication and broadcast properties, Turner expects to generate $1.05 billion in the first year. Second-year sales would produce proceeds of another $1.5 billion, the filing projected.

“A wide array of sources of information now under common control by CBS would thereby be placed in the hands of diverse owners,” the filing contended.

CBS’ publications include Women’s Day, Field & Stream and Road & Track magazines.

Selling non-broadcast properties to focus the company’s efforts “will dramatically increase shareholder annual returns from their present $3-per-share level,” Turner contended.

A cash statement developed by William C. Bevins Jr., Turner Broadcasting vice president-finance, said the merged company would lose $404 million in 1986 but would return to profitability in 1989 with earnings of $39 million. Earnings would dip to $1 million in 1990 because of increased tax liability and would total $176 million in 1994, the last year for which earnings were projected, the filing estimated.

Turner’s plan would be to deliberately increase the network’s “under-utilized” borrowing capacity, according to the filing.

It said that the proposal would not hurt competition in the national television advertising market and that separate news staffs for CBS and Turner Broadcasting would maintain the current level of competition among network news organizations.

The FCC has said it plans to hold an informal hearing this summer on the proposal. Under the agency’s rules, opponents--who include labor unions and some public-interest groups--have five days to file rebuttal comments.