Tax Liability May Prompt Sale of Paley’s 8% of CBS

A heavy tax liability may prompt the sale of the late William S. Paley’s 8% stake in media giant CBS Inc., a published report said today.

The Wall Street Journal said a sale seems likely because the Paley estate, valued at about $550 million, must raise $190 million to cover tax obligations.

A sale of such a large block of CBS stock could rekindle speculation about a takeover of CBS.

Paley, the longtime chairman of CBS who built the company over 60 years, died last month. Much of his estate, including 1.9 million shares of CBS stock valued at nearly $300 million, is to be divided among his six children.

But the newspaper said people familiar with the situation say the Paley estate’s executors may take a vote next week on any stock sale.

A sale would mean that the Paley family would cease owning any part of the company Paley founded in 1928 and could put a large chunk of CBS stock into the hands of a single buyer.

CBS President and Chief Executive Laurence A. Tisch controls Loews Corp. and its 24.9% stake in CBS, and analysts say his holdings are likely to ensure that no unfriendly takeover of CBS could occur.

But analysts feel that Tisch is unlikely to expand his stake in the company because of federal regulations that govern any change of control of the company.

CBS now enjoys an exemption from rules barring owning TV and radio properties in the same market, but that exemption would be lost if a new owner should acquire a 25% stake in the company.

Company executives say privately that Tisch is committed to improving CBS’ performance in the prime-time TV ratings and that he is not likely to sell his stake until he accomplishes that task.