Word: mergers
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Tisch insists that "this company will not be shopped. This deal will not be shopped. We are not selling. We are simply merging two companies, and it's a genuine merger." But many on Wall Street do not believe him. "CBS is clearly in play," says Bruce Thorp, an analyst for PNC Bank. "This deal implies that it's open to all comers." Some analysts insist that CBS is worth $6.4 billion, or $400 a share -- nearly $100 more than last week's closing price. CBS must look mighty fetching to companies (like Disney and other studios) with an itch...
...risk and arbitrage investment firm Mentor Partners. Says Danny, who encouraged Tisch to buy CBS stock in 1985: "My father has four very smart sons -- or three very smart sons and myself -- and my basic business is trading in securities and investing in securities and takeovers and in mergers and acquisitions. So I do have a fairly good idea of any of the issues that might arise in any merger. And I guess he just opted at this point to turn to me for some advice...
According to several sources, QVC's subsequent offer included a cash buyout of CBS, a move CBS declined. Then Diller, with Lipton and Herbert Allen of Allen & Co., whom Danny Tisch calls "the real financial architects of this transaction," rejiggered the proposal as a merger between equal parties. "Around June 10," recalls Danny, "we sat down -- my father, my brother Jimmy, who is executive vice president at Loews, and I -- with Marty Lipton. We didn't really come up with any negatives...
Whatever the obstacles, the CBS-QVC merger could be a quick, happy fix for two media barons under pressure. Diller gets to make a network grow into a giant of cable, broadcasting and only he knows what else (theatrical movies? video games? TV serials for home shoppers?). And CBS gets Diller. In essence, to secure an heir, Tisch bought a company. And a legacy. "Larry gets to walk out," says the TV-industry executive, "not as a failure, but as someone who took the company and turned it around. Now he's a winner: he's probably $400 million ahead...
...face, at least, the merger solves so many problems. Says the TV exec: "Here you put together two companies that seemingly were in trouble. QVC is basically a single great executive with an asset that has no future. CBS is a great asset with a great future but an executive that has no vision. So it was a perfect marriage...