Warner Shelves Quarrel With Chris-Craft

A marital quarrel between Warner Communications and its largest shareholder, Chris-Craft Industries, has been shelved in recent weeks as Warner mapped out a strategy for its cable-TV holdings, sources say.

Warner management has been eager to rid itself of Chris-Craft, which controls 29.5% of the voting shares.

Chris-Craft, for its part, has spent at least six months pondering ways to sell its stake or, in the alternative, gain more than its current three seats on the 14-member Warner board. The rift between the two companies has caused two postponements of Warner’s annual meeting for shareholders, last scheduled for Aug. 9.

Quit Making Offers

According to one source, Warner quit making offers to Chris-Craft Chairman Herbert J. Siegel because the two sides have been so far apart in determining a method or price.

A source close to Chris-Craft, however, says Siegel suspended talks to help Warner deal with another business partner, American Express.

Warner has been under pressure from American Express to either buy or sell its 50% stake in Warner-Amex Cable Communications, a 6-year-old cable-TV venture jointly owned by the two companies.

After playing cat-and-mouse for most of the summer, Warner moved last Friday to buy American Express’ half for $450 million and promised to assume its half of the venture’s $500-million debt.

Aside from the debt, the deal could wind up costing Warner just $30 million in cash, because two offers have materialized to buy Warner-Amex’s two-thirds stake in MTV Networks, operator of cable-TV services, for about $310 million.

In addition, Warner-Amex expects to receive about $110 million from a pending sale of its Dallas cable-TV system, thus getting back a total of $420 million of the amount that it will pay American Express.

Warner and American Express have until Wednesday to act on an offer from Forstmann, Little & Co. and certain MTV executives to take the cable-service company private for $31 a share in cash, or $375 million.

Warner is believed to favor a sale to Forstmann, Little, because that offer would grant Warner an option to buy up to 20% of the surviving company. As of late Monday, however, American Express spokesman Walter Montgomery said that “no decision has been made.”

Signed Agreement

Montgomery declined to say whether American Express is barred from agreeing to sell the MTV assets under an agreement that it signed earlier this summer with Time Inc. and Tele-Communications, when it promised those two companies that it would sell all of the Warner-Amex assets to them if it succeeded in buying out Warner Communications’ half.

Under the terms of the Forstmann, Little offer, MTV’s public shareholders would have the opportunity to sell their shares, in contrast to a back-up arrangement Warner reached with Viacom International.

As announced last Friday, Warner has a 90-day option to sell Warner-Amex’s two-thirds stake in MTV to Viacom for $310 million, once Warner gains full control of Warner-Amex. However, the other apparently would remain publicly held under that proposal.