Westinghouse Board Meets Today as Wall Street Watches for CBS Deal

Wall Street watched for signs Tuesday that Westinghouse Electric Corp. was edging closer to making an offer for CBS Inc., with some analysts suggesting that a regularly scheduled board meeting today could present a natural opportunity for members to vote on a deal.

They cited Westinghouse’s sale Monday of its real estate unit, which had been on the market for months, as an indication that Michael Jordan, the company’s chief executive, was preparing to make a $5-billion cash offer for the network, which has been rumored for more than a week.

The real estate sale, to a private Florida investor group, raised $556 million and is part of a plan to reduce Westinghouse debt by $1 billion by year-end. Meeting that goal would still leave the Pittsburgh-based conglomerate with $2.2 billion of debt, according to Nicholas Heymann, who follows the company for NatWest Securities Corp.

The weak condition of the company has prompted doubts that Westinghouse can assemble the financing necessary to launch such a bid, which would require additional asset sales and bank borrowing, not to mention the capital required to restore CBS to health in the ratings period after a purchase is complete.

Some analysts and investors suggested a theory for why Westinghouse might not make an offer for CBS so quickly: A highly leveraged transaction could weaken its hand in negotiating future asset sales.

“I’d get lockup prices and preliminary agreements on the assets I would need to sell before announcing a deal to prevent duress sales that would not look good to shareholders,” one observer said.

Still, some sources say Westinghouse may be able to finance a purchase with the $2 billion in borrowing lined up in recent weeks and additional financing secured against about $2.9 billion in tax-loss carry-forwards accumulated from disastrous forays into financial services in the 1980s. These carry-forwards could free the company from having to pay taxes on the combined income of the companies for an estimated 10 years.

Executives at CBS, expectant that a bid might be forthcoming early this week, seemed more circumspect Tuesday.

“Everyone got real excited last year about working for Barry Diller,” said one CBS source, referring to a proposed merger between CBS and the home shopping media mogul that collapsed last summer. “We’re not about to get our expectations that high again. Maybe this will happen, but there won’t be a high degree of certainty until it closes, because of all the variables here.”

One hitch is the six months it could take to get a blessing from the Federal Communications Commission, which must approve of the transfer to Westinghouse of CBS broadcast and radio licenses. Because of the delay, Westinghouse could be structuring a lockup arrangement under which it would receive a payment as consolation should another buyer materialize (although those agreements have not stood up in court).

Analysts have speculated that news of the talks between Jordan and Laurence Tisch were leaked last week to smoke out other potential bidders. Although none have come forward, some wishful investors have eagerly sketched out scenarios under which they might.

When Viacom Inc. completes the sale of its cable operations, announced Tuesday, it could be in shape to buy a network. But most analysts say Viacom would more likely build up its own network, called United Paramount Network, than pay $5 billion for one in need of repair.

Chris-Craft Industries Inc., the television station group that is Viacom’s joint-venture partner in the network, is putting up all the capital for the first two years, an estimated $250 million. The stock of Chris-Craft, one of the last independent station groups at a time of heavy consolidation, jumped $3.25 on Tuesday to $38.875.