Company Town : Microsoft, TBS Talks Confirmed : TV: Gates says he’d invest in the right kind of venture. Turner won’t buy King World but may still bid for CBS.

Microsoft Corp. Chairman Bill Gates confirmed Monday that his software company is considering investing in Turner Broadcasting System Inc., which has been trying to round up financing in recent weeks to make a rival bid for CBS Inc.

This came as Turner Broadcasting said after a special meeting of its board earlier in the day that it would not pursue an acquisition of King World Productions Inc., syndicator of such programs as “The Oprah Winfrey Show” and “Wheel of Fortune.”

The announcement caused King World stock to tumble $3 a share on Monday to $40 a share.

In an interview on “Larry King Live,” which is broadcast by Turner’s Cable News Network, Gates said he might invest in the Atlanta-based company as part of a joint venture to develop interactive programming.

“If the right kind of interactive venture was worked out between the companies, it’s possible an investment would be part of that,” Gates said.

Though Gates did not specify an amount, sources say Microsoft is prepared to invest up to $2 billion, which could be used by Turner to mount an offer to compete with Westinghouse Electric Corp.’s $5.4-billion bid for CBS.

“As far as Ted’s plans on where he’d want to go, he’s the best one for that,” Gates said, referring to the chairman of the cable company, Ted Turner.

With about $2.5 billion in debt on its books, Turner has limited borrowing capacity. It had been in negotiations for several months to buy King World for stock in hopes of using the $500 million in cash on that firm’s books to make a bid for CBS.

Wall Street investors were quick to interpret the board’s decision on King World as an indication that Turner had found other means of financing a purchase of the third-ranked network.

“The deal buster was Microsoft,” said one executive close to the company, which also owns Castle Rock Entertainment and the TBS superstation.

One source characterized the discussions with Microsoft as “very fluid.”

In exchange for its investment, Microsoft could gain access to services such as CNN, the Cartoon Network and Turner Classic Movies for its Microsoft Network on-line service hitting the market this month. The network is the foundation for an interactive service.

Turner had called a special board meeting Monday afternoon to discuss several situations it is confronting, including mounting a CBS bid. After what one source defined as a “wide-ranging” one-hour telephone meeting, the company issued a statement saying it “is not ready to announce any plans at this time.”

Wall Street sources said the company is “working out the final details” on an agreement to purchase the financially strapped Samuel Goldwyn Co. for a little more than $100 million. “It is not inconceivable that there could be an announcement this week,” said one banking source, who indicated that the board had approved the purchase based on certain contingencies.

Goldwyn includes a library of 850 films and 700 television episodes, as well as 125 movie theaters.

But sources said the King World purchase had soured as the deal grew more expensive in recent weeks. Executives close to the company say Turner has had an offer on the table for several months to buy King World in a 2-for-1 stock swap. At the time, King World shares were trading in the $40 range. But Turner shares have since risen from the $20 range. They closed Monday down slightly at $22.125, valuing a deal at about $1.7 billion.

That price is high for a company whose fortunes are expected to decline severely after the year 2000. That is when its most lucrative contracts with ABC stations for “Jeopardy” and “Wheel of Fortune” expire, with little chance for renewal.

King World’s other valuable asset, “The Oprah Winfrey Show,” has suffered a sizable ratings decline this year.