Turner Wants to Sell Stake in Cable News Network

Atlanta cable baron Ted Turner said Thursday that he wants to sell part of Cable News Network to ease the debt that he will shoulder as a result of his planned acquisition of MGM/UA Entertainment.

Turner Broadcasting System said it wants to raise $200 million to $300 million by selling 30% to 40% of CNN.

Without the sale, Turner conceded in the announcement, his combined TBS-MGM company would not make enough money to pay off the loans that Turner must take on to buy Culver City-based MGM, for which Turner will pay roughly $1 billion.

If he does not sell part of CNN, the 24-hour news channel that he founded, Turner could refinance all or part of the sale or sell off other assets.

Some Wall Street analysts said Thursday that they believe Turner will have trouble getting the price that he is asking for a share of CNN, particularly since it was a minority share.

Steven Rosenberg, an analyst with the cable-television research firm of Paul Kagan & Associates, said Turner’s asking price places CNN’s total value at more than $600 million, or about 21 times the operating income that Kagan is projecting for CNN and CNN Headline News, its sister cable service, in 1986.

That is far higher than cable-TV properties have sold for recently.

MTV Music Television, for instance, sold to Viacom for 10 times projected 1986 operating income.

Turner apparently has already had trouble peddling CNN. He reportedly contacted both NBC, which is trying to start its own cable news service, and CBS, which Turner tried to buy in a hostile takeover before he settled on MGM.

Both reportedly turned Turner down.

“I think he’ll have an easier time trying to sell to others in the cable industry, who can appreciate the premium value he has set for CNN,” Rosenberg said.

Other possible candidates might be Time Inc., owner of HBO, or Viacom, MTV’s new owner.

Some on Wall Street are growing skeptical about whether Turner’s MGM deal will go through at all, or if it does whether he will have any money left to operate MGM.

“It’s a little like someone who spends everything he has to live in Beverly Hills and then can’t afford to buy groceries,” said one analyst, asking for anonymity.

CNN and Headline News lost $15 million last year, according to figures from Kagan. This year, the company is expected to turn its first pretax profit--a projected $12.7 million.