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Tisch Makes Most of His Piece of the Action at CBS

April 27, 1986|KATHRYN HARRIS | Times Staff Writer

NEW YORK — When CBS was beset last year by two uninvited Southerners, Sen. Jesse Helms (R-N.C.) and Atlanta broadcaster Ted Turner, each intent on taking control, CBS Chairman Thomas H. Wyman decided to visit the Loews Corp. headquarters on the same Manhattan block.

The CBS chairman sought advice about public interest groups that might help his company fight Turner, as Loews Chairman Laurence A. Tisch recalls.

However unsuspectingly, Wyman opened the door to an involvement by Loews that has no end in sight. For although CBS turned down Loews' eventual offer to acquire the company on friendly terms, Loews began buying the broadcasting company's stock in July and today controls 16.7%, as well as a director's seat.

This accomplishment, with no public resistance from CBS management, makes an extraordinary tale in view of CBS' avowed desire to remain independent, and the lengths to which the company went to rebuff Helms, Turner and New York investor Ivan Boesky.

Loews' entrenchment is a testament to Larry Tisch's business skills and personal diplomacy, but also a reflection of the corporate fatigue at CBS after a year of takeover battles and, more recently, its loss to NBC as top-rated network for the prime-time season just ended.

Unless CBS regains its first-place standing in the next year or two, some industry sources wager that Wyman's administration will be replaced by one of Tisch's choosing.

Tisch, in one of the first interviews he has granted since joining the CBS board five months ago, endorses the current management and vigorously defends CBS' conduct in the recorded music industry, where allegations of payola have surfaced. He also denies published reports that he wants CBS to sell the record unit.

But the Loews chairman skirts discussion of the degree of control Loews will exercise if it acquires 25% of CBS stock, as he has vowed to do. "I wish I knew the definition of control," Tisch says. " . . .We intend to buy up to 25%, and what you want to call it is your problem."

He is quite clear about his long-term ambitions, however. The 63-year-old chairman says he hopes the CBS investment will be passed as a legacy to his children. "I think it's a wonderful company and a very interesting business that should be important to them," says Tisch, who with his younger brother, Preston R. (Bob) Tisch, controls 24% of Loews' stock.

The two men have seven grown children, including three sons who work for the tobacco, insurance, hotel and wristwatch conglomerate.

"From the first day I went on the (CBS) board . . I committed myself, not in words but to myself," Tisch said. "This was an investment we were going to keep, and it's not for sale."

Most-Powerful Director

Already, Tisch is widely regarded as CBS' most powerful director. On his own initiative, he has interviewed key CBS employees and suppliers on both coasts.

As a member of CBS' audit committee, he asked to review the company's pension fund management, prompting the fund to sell nearly $300 million of its stock portfolio during the recent stock market rally because Tisch believes that the stock market "is getting ahead of itself."

"Larry Tisch is getting to know the bowels of the business," one longtime CBS executive says.

Adds a high-level Hollywood executive, after meeting Tisch recently: "No question that he's the boss."

Tisch acknowledges that he was visited last month by an investment banker representing Denver oilman Marvin Davis, on the same day the banker conveyed to CBS management Davis' offer to buy the company for $160 a share.

"We were not interested in his offer. Management had no interest in his offer," Tisch says.

The following week, Loews agreed to pay $143.5 million, or $143.50 per share, for a 4.3% block of CBS stock held by Fisher Bros. Financial & Development Co.

The price tag raised eyebrows on Wall Street, because Loews previously paid prices ranging from $104.50 to $120 for its CBS shares. One investment banker says Tisch appears to be in a hurry to consolidate his position before any other major investor materializes.

But Tisch contends that he bought the stock to quell takeover rumors. "I just didn't think that was healthy," he says. "It had nothing to do with my position, really. I thought it was the right thing to do."

So far, Loews has invested nearly $581 million for its 16.7% stake in CBS. Loews has raised $900 million in four different offerings of notes and debentures since December, but Tisch says the company borrowings were timed to take advantage of low interest rates, rather than to bankroll the CBS stock purchases. "We had the money (for CBS) anyway," the Loews chairman says.

Profitable Operation

Loews reported net income of $589 million on revenue of $4.9 billion in 1985. Its 80%-owned insurance company, Chicago-based CNA Financial, generated net income of nearly $272 million, more than double the previous year, while the Lorillard tobacco unit increased 13% for a net income of $137 million in 1985.

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