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Diller, Disney, And Cbs?

Inside Wall Street


The cast hasn't changed much, but there are important new twists in the CBS takeover script. The betting now among buyout pros is that Disney Chairman Michael Eisner and QVC Chairman Barry Diller are in a frenetic race to strike a deal with Laurence Tisch of CBS. Ace investor Mario Gabelli says: "There's a big mating game going on" between CBS and certain groups, including Diller and others.

Tisch denies CBS is for sale. But few believe him--not since June, when he agreed to a merger with QVC, promising to cede the CBS stewardship to Diller. That was before the $2.2 billion offer by Comcast to buy QVC in mid-July. Tisch quickly backed off.

"But don't count out Diller, who is forming a group to resume his quest for the CBS plum," says an investment banker whose firm is involved in raising part of the cash the Diller group will need. This banker says Diller will collaborate either with BellSouth or Tele-Communications Chairman Jack Malone. "One way or the other, CBS will go for sure," he asserts.

But Eisner, who has just had a quadruple bypass, may head Diller off at the pass. He is said to want a friendly CBS merger to reassure shareholders that Disney's leadership is intact and that he's on top of things. "It would be incredibly stupid for Eisner not to take this golden chance to merge with a TV network," says an analyst who knows Tisch and Eisner.

"Although Mike doesn't buy retail and Tisch won't ever sell at a wholesale price, the two might just compromise and meet halfway," says this analyst. He figures CBS, now trading at 311, could command a buyout tag of 400 a share. But Tisch may do a deal at a lower price--with Eisner or Diller.

"Disney and CBS are an incredibly logical fit," says David Londoner, entertainment analyst at Wertheim Schroder. CBS has the "broadest reach of any media property in the country," he says. It could highlight Disney's most valuable consumer products and services. And as a producer of prime-time programs, Disney could benefit mightily from owning CBS, he adds.GENE G. MARCIAL

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