Westinghouse 'to bid for CBS'

Wall Street's attention switched yesterday to the next major takeover expected to revolutionise the American entertainment industry.

Hard on the heels of the $19bn agreed bid by Disney for television broadcaster ABC, the directors of giant US conglomerate Westinghouse are widely believed to have voted to spend $5bn on CBS, one of the top three American television companies.

Whereas the Disney deal came out of the blue on Monday, rumours of a deal between CBS and Westinghouse have been building for more than two weeks.

The boards of both companies were reported to be discussing the transaction yesterday, and some expected an announcement late last night or today.

The deal would mark another spasm in the earthquake that is suddenly transforming the landscape of the media industry in the US and around the world.

The upheaval may be further encouraged by a wide-rangingtelecommunications deregulation bill going before the US Congress for debate today.

President Clinton yesterday vowed to veto the bill in its present form, which focuses mainly on freeing the telephone companies to compete more fully with each other for long-distance calls and to become involved in broadcasting.

Opinion was divided as to whether the Disney-ABC merger reinforced or weakened the logic of Westinghouse's courtship of CBS.

At one level, it seemed to emphasise the necessity for entertainment companies to combine to face the formidable challenge that Disney will now represent. For the same reason, there was speculation that others may rush in to try to outbid Westinghouse for the network. A possible rival may be Ted Turner, the man who built CNN.

"It's like playing musical chairs; you've taken one chair away," Jeffrey Logsdon, an entertainment analyst with Seidler Cos, said of the Disney deal. "Now only CBS is available. I think there's a better than even chance that someone else comes to the party."

Best known for such heavy items as gas turbines and nuclear generators, Westinghouse also owns a string of television and radio stations. However, there are not the obvious opportunities for synergy between it and CBS as between Disney and ABC.

Despite being home for the past year to the popular late-night funny- man David Letterman, CBS is also not the same kind of catch as ABC. Once known as the Tiffany channel for its high ratings and programme quality, it has been in the dumps recently, lagging far behind both ABC and NBC in number of viewers.

Pleading with Congress to dilute the deregulation bill, Mr Clinton complained that "instead of promoting open access and diversity of content and viewpoints, it would allow fewer people to control greater numbers of television, radio and newspaper outlets in every community".

Among other things, the deregulation bill would relax limits on individual companies' ownership of television and radio stations in America. At present, no single company is allowed to control stations reaching more than 25 per cent of the country's population. That limit would be raised to 35 or even 50 per cent.