Turner Still Has His Eyes Set on Owning CBS : Television: Cable mogul would have to give up some assets; experts doubt he will.

In 1985, cable mogul Ted Turner mounted a hostile $5.4-billion bid for CBS Inc., only to be foiled after the network countered by putting a costly refinancing plan into effect.

But Turner’s appetite for a broadcast network has never abated. He recently made an effort to buy NBC, but he encountered opposition from some of his own board members as well as NBC’s owners at General Electric. Now, in the wake of the failed CBS-QVC merger, Turner is re-examining his options. And in typical Turner style, he’s done little to hide his ambitions.

During a retreat for top cable industry executives last week on Cape Cod, the Turner Broadcasting System chief kept excusing himself from meetings to dash into another room, where he could be overheard bellowing into the phone: “With (QVC Chairman) Barry (Diller) out, we’ve got to go in there! . . . I can hold the TV stations in my own name!”

The startled cable executives quickly realized that Turner had his sights set again on CBS and was rushing to get some answers from his advisers before leaving on a chartered jet for St. Petersburg, Fla., and the Turner-sponsored Goodwill Games.

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Although CBS Chief Executive Laurence A. Tisch said Tuesday at a news conference that his network is not for sale, that stance is viewed skeptically because last month he agreed to the QVC merger and new management. In making a play for CBS, however, Turner could face even greater opposition from his two largest shareholders, Denver-based cable TV giant Tele-Communications Inc. and entertainment colossus Time Warner Inc.

As cable TV system operators, TCI and Time Warner would be forced to reduce their stake if Turner acquired a network of TV stations, because federal rules severely restrict cross-ownership of cable and broadcast properties. Analysts agree that neither Time Warner nor TCI would reduce its position in Turner--a vital programming supplier--without extracting big concessions.

Time Warner, for example, has indicated that it would give up its 19% stake in exchange for certain Turner programming assets. Cash wouldn’t do, sources say, because Time Warner would have to pay onerous taxes on its original investment in Turner. So far, Turner has not been willing to part with any assets.

Even if Turner and Time Warner reached an agreement, no one’s sure that TCI Chief Executive John C. Malone would go along with the plan unless TCI also received some programming asset. “I can’t believe he’s going to let Time Warner walk away without his getting something too,” one executive said.

The Turner assets include the CNN and Headline News services and four entertainment networks: TBS, TNT, The Cartoon Network and Turner Classic Movies. Since 1985, Turner has owned the MGM and pre-1948 Warner Bros. film libraries; last year the company acquired Castle Rock Entertainment and New Line Cinema, two leading independent production companies.

If Turner pursues a traditional network, it would make no sense to part with CNN or Headline News because Turner could merge his news operation with that of the more established network. Such a combination would save $400 million, by one analyst’s estimate.

So any negotiation would likely center on Turner’s entertainment assets--which would be painful, since these programming services are growing faster than the older news operations.

In early 1993, for example, the Wall Street firm of Gerard Klauer Mattison & Co. hypothesized that Time Warner could swap its Turner stock for the two film libraries and Cartoon Network in a deal worth roughly $1.25 billion.

But Nandita Parker, the firm’s entertainment analyst, noted Tuesday that the Cartoon Network alone could be worth as much as $2 billion because it has tremendous untapped potential as a mass-appeal network. So far, it has had limited distribution because older cable TV systems don’t have enough channel capacity for newer services.

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Still, Parker is one of the analysts who thinks Turner yearns for a network. “If there’s a time to do it, it’s now,” she said, “But how do you do it at this stock price? (Turner) shares are undervalued and CBS is near its high.”

On the American Stock Exchange, Turner Class A shares closed Tuesday at $18.25, up 25 cents but still near the 52-week low of $17. CBS shares fell $5 to $307 on the New York Stock Exchange. The stock’s 1994 high was $323.75.

Although their chief executive pines for a network, some Turner executives are divided about the desirability and feasibility of owning one, sources said.

Last week, at an Allen & Co. conference in Sun Valley, Ida., some Turner executives expressed the view that a network acquisition would be untenable because of regulatory problems and the likely opposition of key Turner shareholders.

“He’d love to do it, but (Time Warner Chief Executive) Gerry Levin is not going to let him do it,” said one person close to the Turner board. “It’s clear it’s creating a big level of frustration with Ted.”

“Ted is an idea a day, but he’s got to solve his corporate governance problems first,” added another knowledgeable source. “And giving up one of his crown jewels would be very painful.”

Tom Wolzien, an analyst with Sanford C. Bernstein & Co. who recently met with Turner executives, said company officials were exploring ways in which TBS’ cable owners might shift to non-voting stock and move off the board.

“This is a difficult process,” Wolzien said. “Either Time Warner has to have a reason to agree to do it, or there’s a Draconian process by which one shareholder can be forced to buy out the other. It’s risky, too, because the first guy who’s making the offer can be bought out himself.”