CBS Won't Help Time Warner Resist Murdoch, but Would Maybe Buy CNN

Company Would Rather Be Nimble Than a 'Monolith,' Moonves Says

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CBS President-CEO Les Moonves at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, this month.
CBS President-CEO Les Moonves at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, this month. Credit: Scott Eells/Bloomberg

Leslie Moonves says his CBS Corp. is interested in buying the CNN news channel if it becomes available. Getting between Rupert Murdoch and Time Warner is another matter.

Mr. Moonves, who spoke to reporters yesterday at a Television Critics Association event in Beverly Hills, Calif., said in the past he's discussed "doing something with CNN," the pioneering cable channel owned by Time Warner, with his CBS News on broadcast. Combining the operations would allow them to share resources and save money.

While showing interest in CNN, Mr. Moonves suggested he wouldn't consider teaming up with Time Warner in a broader transaction. Time Warner shares jumped this week after the company said it rejected an unsolicited $75 billion buyout offer from Murdoch's 21st Century Fox Inc. One defense suggested by analysts is for Time Warner to combine with another media company -- such as CBS.

"Nobody ever competes well against Rupert," Mr. Moonves said.

Mr. Murdoch, who is known for his tenacity in pursuing deals, already owns Fox News, so he would sell CNN to avoid a challenge from antitrust regulators if he can persuade Time Warner to accept a takeover offer, a person with knowledge of the situation said this week. Fox calculates that CNN could fetch as much as $8 billion should it be sold, the person said.

Bidding war
Fox's estimates for CNN's value are based on a typical multiple of 12 to 15 times earnings for media assets, the person said. If a bidding war among buyers were to erupt, CNN could go for as much as $10 billion, according to the person.

Time Warner surged 17% on July 16, after news broke of Mr. Murdoch's proposal. Smaller media companies including CBS also have seen their shares rise with the expectation that a deal for Time Warner would usher in a wave of consolidation among media companies.

CBS, controlled by Chairman Sumner Redstone, fell 1.1% to $60.95.

Among major U.S. broadcasters, CBS is the most in need of more cable networks because it has relatively few, said Paul Sweeney, an analyst at Bloomberg Industries. CBS could use CNN to get access to 99 million U.S. households and millions more potential viewers around the globe.

CBS, which owns Showtime on cable along with the broadcast network, recently spun off its billboard business, bringing the company cash that could be used for deals.

"We're in a very advantageous position," said Mr. Moonves, who is CEO. "Our balance sheet is very good."

Industry consolidation won't pressure CBS to get bigger and compete with "monoliths," Mr. Moonves said. CBS prefers to "be nimble," he said.

~ Bloomberg News ~

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