P. M. BRIEFING : BellSouth to Drop Agreement to Merge With LIN Broadcasting

BellSouth Corp. said today that it will drop its agreement to merge with LIN Broadcasting Corp., which is pursuing another combination with McCaw Cellular Communications Inc., under a $66.5-million termination deal.

BellSouth’s offer to terminate the previous agreement also includes a provision for McCaw to contribute $26.5 million to Los Angeles RCC’s Inc., of which BellSouth owns 85% and McCaw 15%. The California company owns an equity interest in Los Angeles Cellular Telephone Co.

BellSouth said the termination fee was part of a previous agreement in which it and New York-based LIN were to merge into a cellular telephone company that would have had 55 million potential customers and dominance in some of the nation’s top markets.

LIN last week asked BellSouth to terminate the agreement when McCaw made a revised $3.38-billion buyout offer. The LIN board has recommended that its shareholders approve the McCaw deal.

Some analysts said they thought BellSouth would come back with a new offer. But BellSouth Enterprises President William O. McCoy said today the offer, a non-cash proposal made in September, was the best it could do.