Entertainment Merger Mania : PROFILE : CEO Tisch Stands to Profit Handsomely From Sale of CBS to Westinghouse

Laurence A. Tisch, 72, once viewed as merely a short-term speculator in CBS Inc. stock, now stands ready to finally cash out of the broadcasting giant--nearly a decade after he began investing in CBS and became its chief executive.

With CBS accepting a $5.4-billion takeover bid from Westinghouse Electric Corp. on Tuesday, Loews Corp.--the conglomerate that is 32% owned by Tisch and his brother, Preston (Bob) Tisch--becomes eligible to sell its remaining 18% stake in CBS for a pretax profit that would total more than $500 million, Loews financial records indicate.

In addition, records indicate that Loews has probably reaped close to another $500 million from CBS shares it’s sold over the years. Loews at one time owned 25% of the network.

CBS’ sale is likely to cap Larry Tisch’s hugely profitable career, during which the two brothers rose from modest beginnings in Brooklyn, N.Y., and parlayed investments in lodging, tobacco, insurance and entertainment into net worths that last year exceeded $1 billion each, according to Forbes magazine.

Tisch has made no secret of his desire to leave CBS, and he was widely reported to be eager to divest Loews’ CBS holdings. When CBS was mulling a merger with cable network QVC Inc. last year, Tisch said publicly that after several years at CBS’ helm, it was time to move on.

Tisch took over the CBS reins after leading a boardroom coup that led to the ouster of Thomas H. Wyman as chief executive and helped CBS avoid the threat of a hostile takeover. Even then, many analysts believed Tisch’s stay at CBS--and Loews’ investment in its stock--would be brief.

Instead, Tisch spent the next several years overseeing big changes that in some cases boosted CBS’ fortunes, but in others proved embarrassing failures.

In an effort to get CBS back to its broadcasting roots, he rapidly sold the company’s magazine, record and music publishing units. Critics said he sold the lines too cheaply, but Tisch defended the sales as necessary to bolster the network.

He rebuilt CBS’ prime-time television schedule with shows such as “Murphy Brown” and “Northern Exposure,” but then watched last season as the network’s three-year reign as ratings leader collapsed with a precipitous drop to third place behind ABC and NBC.

Tisch snared comedian David Letterman from NBC, but then watched last year as Fox Broadcasting Co. raided eight CBS affiliates and outbid it for the broadcast rights to the National Football League.

Tisch defended the moves, telling The Times in a 1994 interview that “we’re doing the right thing by shareholders.”

Shareholders did indeed benefit. CBS’ stock climbed steadily during Tisch’s tenure, from about $25 a share in 1986 to its close Tuesday of $77.75 (after adjusting for a 5-for-1 split in 1994).

Loews currently owns 11 million CBS shares, so Westinghouse’s takeover bid of $81 a share values Loews’ stake at $891 million.

According to filings with the Securities and Exchange Commission, Loews estimated its CBS investment at $294 million as of Dec. 31, so the Westinghouse deal would mean a pretax profit for Loews of $597 million. Two previous sales of CBS shares gave Loews a combined $307-million gain, the documents show.

Tisch and his brother earned their reputations as shrewd investors after building Loews into a diversified concern that today owns or controls the Loews hotel chain, CNA Insurance, Bulova watches and Lorillard cigarettes.

Their start came in 1935 when their father bought a summer camp in New Jersey. After Larry Tisch earned a master’s degree from the University of Pennsylvania at age 20, the family sold the camp to buy a resort hotel in Lakewood, N.J., and that became the springboard for a flurry of investments in hotels and resorts along the East Coast.

They merged their hotels into Loews in the early 1960s, bought Lorillard in 1968 and took over CNA in 1974 before turning their sights on the entertainment field in the early 1980s.

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Associated Press contributed to this report.

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CBS Stock

Quarterly highs, except latest:

Tuesday: $77.75, unchanged

Source: TradeLine