Spinoff Gives CBS A Chance to Sink or Swim on its Own
Nov. 14, 1996
NEW YORK (AP) _ In the blink of an eye, CBS has gone from a mere cog in a company of nuclear generators and power plants to the driving force of its own broadcasting powerhouse.
Westinghouse's decided Wednesday to spin off its broadcast properties into a separate corporate entity. The network of David Letterman, Dan Rather and Bill Cosby is suddenly in a position to chart its own business fate.
``We don't have anybody to hide behind anymore. We have to go out there and do it on our own,'' said Peter Lund, who will continue as CBS president under Westinghouse chairman Michael Jordan, who is staying with the media side of things.
Lund has been the architect of a comeback at CBS in the year since Westinghouse took over the troubled network from former Chairman Laurence Tisch. CBS's prime-time ratings are up this year, while down for ABC and NBC.
The yet-unnamed, $4.2 billion broadcasting company will be based in New York and include CBS's television and radio holdings, the cable television company Group W Satellite Communications and the about-to-be-acquired Infinity Broadcasting group, with its marquee names Howard Stern and Don Imus.
That deal will give the broadcast company 83 radio stations and 16 TV stations, reaching one-third of the nation.
Left to function in a separate $4.6 billion company is Westinghouse's industrial half, which will focus on electric power generators, including the world's largest nuclear-power business, and its Thermo King mobile refrigeration line. It will remain in Pittsburgh and be called Westinghouse Electric Co.
While Westinghouse sold its appliance manufacturing business more than 20 years ago, it still is often remembered as a refrigerator-maker. That image has been a drag on the company's stock price, analysts say.
The industrial and media businesses are roughly equal in size, but the media side accounts for most of the stock's value, and as a separate entity, it could attract more investors, analysts say.
Robert Wussler, a media consultant and CBS president during the 1970s, said it was a clear plus for CBS. ``It hit rock bottom under Larry Tisch and they seem to all be pulling in the right direction,'' he said.
After a disastrous effort to attract younger viewers, CBS played to its strength this year by trying to bring back its bedrock audience of older viewers. The network wooed Cosby for a prime-time comedy, promised to compete for NFL football rights _ which it lost to Fox in a major embarrassment _ and plans to launch a new cable network, Eye on People, next March.
``It's in the early days yet, but we're encouraged by what we see,'' said Westinghouse Chairman Michael Jordan. ``It's going to take a couple of years before we're back at No. 1, but we're committed to making that happen.''
Jordan will continue as chairman and chief executive officer of the broadcast company. No leader has yet been selected for the industrial company.
Stockholders will be mailed two shares, one in each company, for each share of Westinghouse.
Westinghouse stock, which had been rising on expectations of the split, closed Tuesday at a 52-week high, but dropped 87 1/2 cents to $19.75 Wednesday on the New York Stock Exchange. As recently as late August, Westinghouse was trading at $15.50 a share.
Jordan wouldn't comment about Westinghouse's rumored interest in purchasing Gaylord Entertainment Co., majority owner of Country Music Television and the Nashville Network.
He also dismissed talk that Westinghouse's broadcast business might be a takeover target itself. ``That's a big check if somebody wants to write it.''