Westinghouse Electric Corp. is staying in the broadcast business.
The owner of Group W will be spare its broadcasting unit the auction block as it pares its other operations, specifically its hemorrhaging financial services business, in a bid to become profitable again.
Group W owns five network affiliated TV stations and 16 radio stations and a TV syndication division. The unit’s sale had been subject to much discussion over the past week as a way to raise desperately needed cash.
Westinghouse’s financial arm, one of the nation’s largest credit companies, sparked more than $ 2.8 billion in write-offs over the past year.
A board meeting on Saturday in Pittsburgh, however, outlined a different strategy.
Instead of jettisoning broadcast, the giant corporation outlined a three-year program of divestitures: starting with an accelerated sale of the financial unit’s assets, which is lumbering under $ 6 billion in debt, while taking a record $ 2.35 billion fourth-quarter charge.
It is also unloading four other units, including its real estate development arm and office furniture maker Knoll Intl.
The decision to keep the broadcasting arm surprised some.
One Wall St. observer said that what likely saved Westinghouse’s broadcast operations from a bust-up was its cash flow, which is running at around $ 187 million annually. According to analysts, the unit is expected to contribute nearly 20% of Westinghouse’s operating profits this year, or $ 160 million on a total of $ 855 million.
Group W had been the subject of such speculation over the preceding days, with analysts already putting on it a price tag of $ 1.5 billion, or eight times cash flow.
In 1991, Westinghouse recorded a net loss of $ 1.1 billion on revenues of $ 12.8 billion.