Fears CBS Would ‘Exploit the Situation’ : Turner Withdraws Trustee Plan

Atlanta broadcaster Ted Turner on Tuesday withdrew a complex proposal that might have allowed him to take control of the CBS Television Network without specific federal approval.

In a letter to the Federal Communications Commission, Turner’s lawyer, Charles D. Ferris, said “the substantial risk that CBS would seek to exploit the situation” brought about by the trusteeship that Turner proposed outweighed the benefits of the plan.

He did not say how he thought CBS might exploit the situation.

A week ago, Turner told the National Press Club that a CBS offer to repurchase 21% of its stock by the end of July “puts incredible time pressure on us.”

That CBS plan restricts the amount of debt that the company can have on its books and, if successful, would effectively kill Turner’s plan to borrow against CBS assets and future profits to finance his takeover of the company.

Left pending before the FCC is Turner Broadcasting System’s request that the CBS repurchase offer be blocked as an illegal transfer of control from stockholders to management.

James C. McKinney, chief of the FCC’s mass media bureau, refused to speculate on how fast the commission will act on that request.

Also pending is Turner’s full application to take control of the entire CBS corporation.

The so-called short-form application, withdrawn Tuesday, would have split CBS in two parts, with Turner taking control of the unregulated pieces--the most significant of which is the TV network that he covets--and a trustee holding the licensed radio and TV stations, pending disposition of Turner’s long-form application to control them.

A short-form application is used to gain temporary control of a broadcast station. It is usually used in the case of death or bankruptcy of an owner.

A long-form application, requiring a period of public comment, is used when there is a substantial transfer of control.

Turner said he based his decision to withdraw the short form, in part, on an assumption that the long-form application would be acted on within two to three months.

September Decision

FCC Chairman Mark S. Fowler told a House committee last week that a September decision was possible, but “early this fall” was as close as he’d come to making a prediction.

The commission set hearings on the CBS-Turner Broadcasting fight for Aug. 1 and Aug. 2.

“In view of these developments, which impact very favorably on the timing of FCC action on our long-form application, it does not appear necessary at this time to seek an extraordinary short-form approval,” Turner said in a statement released in Atlanta.

A federal court in Atlanta also has been asked to block the buy-back plan. A hearing is scheduled July 24.

Ferris said in his letter to the commission that “TBS fully expects to prevail in this litigation.” He said he expects the federal court to step in and halt the CBS self-tender.

However, Ferris said, “even if CBS’ offer is permitted to go forward by the courts, TBS intends to continue to seek to acquire control of CBS.”

The letter did not say how that might be accomplished, and a spokesman for Turner, Ernest Sando of the New York public relations firm D. F. King, said Turner Broadcasting would have no comment on the letter.

Ferris did not return a reporter’s phone call.

One analyst, Bill Lincoln of Frazier, Gross & Kadlec in Washington, said the most likely option was adding cash to Turner’s current cashless offer of securities that he values at between $150 and $175 per share.

A proxy fight is also a possibility, but Lincoln said he regarded that as unlikely because it is such “a hard row to hoe.”

On Thursday, a Senate committee will hold hearings on various proposals to change the law to require FCC approval for network transfers. Current law requires federal approval of the transfer of licenses of individual stations but not networks, which are not licensed.