Eye on Chris-Craft

Negotiations heat up between companies

Wall Street once again tuned into a possible acquisition of television station group Chris-Craft Industries Inc. by CBS, as talks between execs resumed and shares of the companies held steady in a declining marketplace.

Top-level execs from both companies began talks on a potential deal Thursday. Negotiations reportedly went well into the weekend. A deal could be worth as much as $3.5 billion, sources close to the discussions said. Chris-Craft has a market cap of $2.5 billion.

Shares of CBS fell $1 on Friday to close at $61, a loss of 1.6%. Earlier in the trading day, the stock was down to $56.75. Chris-Craft was up 38¢ to close at $75.38.

Considering that the Dow Jones Industrials index fell 289 points on Friday, both stocks managed to hold their own, signaling Wall Street was fairly confident about a finalized deal coming out of the talks, which have been held on-and-off for months.

The recent merger mania between the online and traditional media worlds may have sparked the debates and renewed speculation over Chris-Craft and CBS again. Negotiations between Chris-Craft and Rupert Murdoch’s News Corp. have been called off, while the Tribune Co. has also tabled a deal, sources said.

CBS, which is being acquired by Viacom, is pursuing the deal on behalf of both companies.

Chris-Craft owns 10 television stations, as well as 50% of UPN. Viacom owns the other half.

The recent lifting of federal rules that prevented a broadcaster from owning two stations in a single market has made Chris-Craft ripe for takeover.

Viacom agreed in September to merge with CBS, a $37 billion combination that raises regulatory issues that may be partly satisfied by a change of ownership at Chris-Craft.

FCC rules prohibit one owner from owning two television networks, such as CBS and UPN. Furthermore, the merger would create a television network that owns television stations reaching more U.S. TV households than the current 35% limit.

CBS topper Mel Karmazin has said he would consider selling stations or other assets to remain in compliance with FCC rules and make the acquisition of Chris-Craft possible.

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