Westinghouse denies stations are for sale

Westinghouse Electric Corp. yesterday denied a published report that it has approached Kohlberg Kravis Roberts & Co. in an attempt to sell its valuable broadcast assets.

A Westinghouse Broadcasting spokesman insisted the unit’s various components, which consist of five network-affiliated TV and 16 radio stations as well as satellite enterprises (including syndicator Group W Prods.) and a telecommunications business, are not currently on the market, as had been reported in the New York Times.

Speculation about a possible sell-off of the profitable broadcast unit surfaced again this week in the Wall Street Journal after Westinghouse announced it was looking at a variety of ways to resolve the problems in its troubled financial services division.

The company said it may take an additional charge against earnings and is evaluating its businesses.

Westinghouse reportedly has hired Lehman Bros. and Goldman Sachs & Co. to arrange a restructuring that could include asset sales.

Despite the rampant rumors and speculation, high-ranking Westinghouse sources yesterday said the radio and TV stations would not be put on the block.

Westinghouse held talks with KKR about a year ago concerning a possible buyout of its radio properties, but the discussions abruptly ended when the investment group offered only 70 cents on the dollar.

“That was the last conversation we had with them,” an insider said.

Westinghouse sources noted it was highly unlikely the company would consider taking a huge tax hit of 35 cents on the dollar by selling off some or all of its longstanding broadcasting properties, which have already fully depreciated.

Also, they pointed to the difficulty of finding a strategic buyer that would be willing to pony up the $ 1.5 billion needed to meet the company’s price for the TV stations, which would be roughly eight times cash flow.

The TV stations were worth about $ 2 billion at their peak four years ago, when cash flow multiples were in the 12-times range.

Today, they would be worth at most $ 1.2 billion, per Paul Kagan Associates senior analyst Bishop Cheen.

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