CBS TV, Cable Chief Lund Quits Abruptly

In a stroke of bad timing that could portend a brewing management shake-up at Westinghouse Electric Corp., Peter Lund is stepping down as president and chief executive of the company’s CBS television and cable division on the eve of its annual meeting with more than 200 affiliate stations.

Sources say Lund’s resignation, which the company would neither confirm nor deny, results from a power struggle with Mel Karmazin, Westinghouse’s single-largest shareholder and CBS Radio chief. Karmazin has been slamming the table in management meetings and complaining loudly on Wall Street recently about the company’s stagnant stock price and the slow turnaround of CBS’s television group.

Sources say Lund refused to go along with a plan under which CBS’ 14 television stations would report to Karmazin, leaving Lund with only the CBS network and cable operations that include the fledgling Eye on People channel and two country music networks being acquired from Gaylord Entertainment.

As part of the restructuring, which sources say also includes cutting $100 million in expenses, the cable and network operations will report directly to Westinghouse Chairman and Chief Executive Michael Jordan.

Lund, who rose from the CBS station ranks to become president in 1995, was scheduled to address the affiliates meeting in Los Angeles next week, at which the fall schedule will be unveiled.

Sources close to Karmazin speculate that the powerful radio executive, who acquired 2% of Westinghouse shares last year by merging his Infinity Broadcasting Corp. into CBS Radio, is positioning himself to run the entire broadcast group, presumably edging out Jordan. Jordan has promised shareholders that the company’s languishing stock price will rise dramatically once the broadcast group is untethered from the troubled industrial assets of Westinghouse at the end of September.

At CBS, Karmazin presides over the nation’s largest radio group and Westinghouse’s most profitable sector. Karmazin has strutted his performance to Wall Street, brazenly calling an independent meeting with analysts recently in which he complained about Westinghouse’s stagnant stock price and television’s poor showing.

Karmazin apparently has complained to associates that Jordan misled him about the condition of the company. While Jordan has told analysts that the stock is worth in the mid-$20 range, the shares have hovered in the high teens since Westinghouse’s purchase of CBS.

On Thursday, Westinghouse shares closed unchanged on the New York Stock Exchange at $17.

While CBS Radio profit more than doubled to $47 million in the first quarter ended March 31, the station group’s earnings inched up only slightly to $56 million and the network lost $60 million.

Short of taking over the broadcast group, Karmazin could get Wall Street backing to buy the entire broadcast group, or separate out the radio group and sell off the television and cable properties to a buyer, such as Universal Studios.

CBS affiliates, who have been longtime supporters of Lund, worry about a a wave of turmoil similar to the one they witnessed under previous owner, Laurence Tisch. “The sad thing is, we went through this with Tisch,” said Alan Bell, who runs four CBS affiliates as the president of Freedom Broadcasting. “This company has been through hell and this portends more of it.”