Board Nixes Turner’s Bid for Financial News Service
Turner Broadcasting System Inc.'s board again rejected a proposal to buy controlling interest of Financial News Network, effectively ending any move to merge the two cable concerns, sources said Friday.
Sources close to the negotiations, who asked not to be identified, said Turner’s board met Thursday and, for the second time in a year, decided not to pursue a deal in which Turner would buy the 45% of FNN shares owned by the cable financial news service’s parent company, Infotechnology Inc. of New York, for $100 million.
Infotech also controls United Press International, a separate company from FNN.
CNN founder Ted Turner had wanted FNN to bolster the financial news coverage of his Cable News Network channel, which will face some competition starting next month when the National Broadcasting Corp. launches its own financial news cable channel, CNBC.
They said Turner was worried the new CNBC channel would combine financial news and general news, becoming a direct competitor to his all-news CNN.
A source close to the negotiations said Turner’s board of directors believed that NBC would be willing to restrict the new channel’s coverage to financial reporting to avoid a head-to-head competition between it and CNN.
Concern Over Cost
The source said the board is giving Turner time to determine if CNBC will concentrate solely on financial news.
Other sources, within the Turner organization, said the board was also concerned that the company could not afford the $100-million FNN deal.
Turner must receive board approval for any expenditure over $2 million as part of an agreement made a year and a half ago by the then financially ailing Turner Broadcasting System and independent cable operators.
The operators agreed to invest $575 million in Turner in return for a 37% interest in the company and seven seats on the 15-member board.
Spokesmen for Infotech said earlier this week that no “definitive” deal involving FNN existed. However, in a statement, the company said it was pursuing “possible joint venture or business combination transactions involving FNN.”
Sources said Infotech was negotiating with Turner, ABC-Capital Cities, NBC and Dow Jones & Co., owner of the Wall Street Journal.
But the recent refusal by the Turner board to go along with the deal will more or less end negotiations between the two companies, the sources said.
Cut Off Early
The sources said Turner also approached his board less than a year ago with a proposal to buy controlling interest in FNN and was turned down.
They said negotiations between Infotech and Turner had never reached the stage where a formal proposal was made.
Meanwhile, a Dutch financial newspaper this week reported that a Dutch group that had shown an interest in buying Infotech may reconsider its intentions because of the reports that Turner wanted to acquire control of FNN.
The 55% of FNN stock not owned by Infotech are outstanding shares.
FNN stock closed unchanged at $10.125 in Thursday trading on the over-the-counter market.