Turner May Bid for Financial News Network to Defend Turf

Turner Broadcasting System is expected soon to try to buy a controlling stake in Financial News Network as a means of defending Turner’s Cable News Network from the competition of a planned National Broadcasting Co. cable channel, FNN executives say.

FNN’s stock leaped $1, to $10 a share, in over-the-counter trading Tuesday as the company acknowledged in a statement that “we have received and have been considering preliminary proposals for possible joint venture or business combination transactions.” So far, the statement added, “FNN’s board of directors has not received or acted upon any definitive proposal.”

The statement was in reaction to a report in the Wall Street Journal that Turner was set to buy a roughly 50% interest in FNN for $100 million to $110 million, pending approval by Turner’s board Thursday. The story incorrectly suggested that FNN had received a formal offer from Turner and that FNN ruled out other firms that might be interested in a joint venture or combination, FNN sources said.

Based in New York, 7-year-old Financial News Network reaches 32 million homes with programming that consists mainly of financial news but also includes some sports and home-shopping shows. Its controlling shareholder, with a 45% share, is Infotechnology, a New York venture capital firm that also owns the United Press International news service.

Must Sell Deal to Board

A United Press International news story distributed Tuesday quoted FNN officials as saying the two sides do not yet have a deal and that FNN is also still in talks with the owners of the NBC and ABC television networks, as well as Dow Jones & Co., owner of the Wall Street Journal and Barron’s magazine.

The UPI story also suggested that Turner Broadcasting Chairman Ted Turner may still face the job of selling the proposal to his board. It quoted an FNN official who noted that the Turner board shot down a merger proposal last year and commented: “Turner doesn’t have control of his board.”

“We’re going to get the best price,” the FNN official added.

Turner is said to be strongly in favor of buying FNN as a means of countering expected competition from NBC’s Consumer News and Business Channel, which debuts next month. He fears the capability of first-ranked NBC in the business and consumer news area and also worries that the network might eventually convert the cable channel to a general-interest news format, directly rivaling CNN.

To win approval of the proposal, Turner may need to persuade representatives of a group of cable operators who won seats on his board in mid-1987 by buying a 37% stake in TBS for $575 million. Three of the 15 seats on the board are held by Tele-Communications Inc., which is the nation’s biggest cable systems operator and has agreed to help launch the new NBC cable channel.

A Turner spokesman declined comment, acknowledging only that Turner’s directors will meet Thursday.

One Wall Street analyst, Jessica Reif of the CL Global Partners brokerage, said the purchase of a controlling stake by Turner “would make perfect sense. FNN has been doing better recently, and this would give Turner a perfect base” with which to compete with the new NBC channel.

But Fred Moran, head of Moran & Associates Research, which specializes in cable-TV securities, insisted that the deal would do nothing to improve CNN’s competitive position. “You don’t protect a vulnerable asset by buying an even weaker one,” he said. “This is the old Turner. I hope the cable companies don’t give him more rope, or he’ll hang himself.”