Ted Turner won the Securities and Exchange Commission's permission Friday to offer high-interest securities for CBS stock, but his $5.4-billion network takeover bid must still clear other legal and regulatory obstacles.
In a statement issued by Turner Broadcasting System in Atlanta, Turner said: "We are, of course, pleased that we are now in a position to commence our exchange offer. We look forward to the opportunity of presenting our offer to CBS shareholders and letting them determine the future course of their company."
CBS spokeswoman Anne Luzzatto declined to comment on the SEC action.
Although Turner's company said the offer would be mailed soon to CBS shareholders, Turner must still obtain permission from the Federal Communications Commission and the Justice Department's antitrust division in his network takeover bid.
The SEC's staff declared effective Turner's offer to give CBS stockholders high-interest securities--so-called junk bonds--valued at $5.4 billion in return for their shares of CBS stock. The offer pledges future profits and assets as collateral for the debt.
The staff reviewed Turner's prospectus and determined that it was in compliance with SEC regulations governing securities offerings. The finding means that, as far as the SEC is concerned, Turner can proceed with his offer, said a commission official, who spoke on condition he not be identified.
But the FCC is still reviewing Turner's bid because it would change the ownership of broadcast licenses for local radio and television stations owned by CBS.
The Justice Department must also determine if antitrust laws would be violated by the merger of CBS and Turner's company, which owns Cable News Network.
Turner, who wants to gain control of 67% of CBS stock, has said that he will not buy any shares until he obtains FCC approval to acquire the local broadcast stations owned by the network.
In its statement Friday, Turner Broadcasting said that, once FCC approval is obtained, it would send an updated prospectus to CBS shareholders to "provide updated information to reflect any intervening material events and updated historical and pro forma financial statements."
Turner is proposing to sell CBS' publishing division and Philadelphia television station WCAU to help finance his purchase of the network.
CBS, which opposes the takeover, has asked the FCC to conduct a formal hearing where documents and witnesses can be subpoenaed before making a decision on Turner's request.