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CBS Said to Be Close to Buying King World


CBS Corp. and King World Productions Inc. are close to an agreement in principle under which the broadcasting company will buy the syndicator of such programs as "Wheel of Fortune," "Jeopardy!" and "The Oprah Winfrey Show" in an all-stock deal worth more than $2.8 billion.

Sources close to the negotiations, which have been underway for several weeks, warned late Wednesday that a few issues remain unresolved and that the deal could still fall apart.

Neither King World nor CBS would comment, but sources said the CBS board met Wednesday to approve the broad outline of the deal, which would give the network ownership of the "Hollywood Squares" program that runs on its television stations and rights to distribute some of the biggest cash generators in syndication.

The terms of the transaction, which could be announced as early as today, could not be determined, but sources said King World shareholders would get $33 to $35 for each of their shares, which closed Wednesday at $30.56, up 50 cents, on the New York Stock Exchange.

That is a rich premium over the $24 at which the shares were trading when news of the talks leaked two weeks ago.

Despite a price that some analysts say verges on being too generous, Wall Street has endorsed the deal, driving CBS shares to a 52-week high of $41.25, also on the NYSE. They closed Wednesday at $40.81, down nearly 19 cents. The stock has also been helped by CBS Chief Executive Mel Karmazin's promise to make a major investment in the Internet.

Sources say Karmazin is eager to get his hands on King World's $1 billion in cash, which would be given a greater value on CBS' books because of the broadcaster's higher trading multiple. Karmazin is also trying to reduce the company's reliance on the network.

Sources said one issue still up in the air is the role of Michael and Roger King, who with their family control about 23% of King World, and whether they would report to Karmazin or CBS Television Chief Executive Leslie Moonves. Analysts consider the Kings the best salesmen in syndication.

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