CBS, King World Had Merger Talks

CBS Corp. and King World Productions Inc. have held merger talks in recent weeks to work out a marriage of the network and King World’s television production and distribution, an industry source confirmed Sunday.

“There have been talks,” the source said. declining to comment on the status of negotiations. A CBS spokesman declined to comment, and King World spokeswomen were not available.

King World, the Los Angeles-based distributor of the “Oprah Winfrey Show” and “Jeopardy!” and producer of “Inside Edition,” has been the subject of recent takeover rumors. On March 17, the company’s stock soared 14% on speculation it would be sold.

Merrill Lynch media analyst Jessica Reif Cohen said immediately after the one-day surge that King World is “a logical fit for a traditional television broadcast network, given their expertise and consistency in developing, producing and distributing high-quality television programming for the syndication market.”

The analyst added that King World “brings an incredible balance sheet with no debt, over $1 billion in cash and free cash flow of close to $200 million per annum.”

A deal with CBS would be an extension of an existing relationship between King World and the network. CBS’ owned-and-operated television stations buy programming from King World, most recently the updated version of “Hollywood Squares.”

King World has a market capitalization of nearly $2.15 billion based on Friday’s closing stock price of $29.94. CBS is worth about $28 billion. Both trade on the New York Stock Exchange.

In the quarter ended Nov. 30, distribution of “Oprah” accounted for 38% of King World’s $194.3 million in revenue, down from 43% in the year-ago period. Distributing “Wheel of Fortune” accounted for 18% of the November quarter’s revenue, off from 21% in the prior year, and distributing “Jeopardy!” brought in 16% of 1998 revenue, down from 17% in 1997.

King World also co-produces and distributes “Hollywood Squares,” a first-run syndicated game show, and “The Roseanne Show,” a first-run syndicated talk show. Both programs premiered last September. In the three months ended Nov. 30, the two new programs accounted for 13% of King World’s revenue.

The company also produces and distributes the first-run syndicated newsmagazine program “Inside Edition.”

Last week, the company said its production of “The Martin Short Show” has been purchased by KCOP-TV/Channel 13 in Los Angeles for a fall 1999 premiere.

The new daily one-hour talk show featuring Martin Short, a “Saturday Night Live” alumnus, will be produced in association with Dolshor Productions Inc., Short’s production company.