WESTINGHOUSE SNAGS INFINITY : ENERGY COMPANY CONVERTING ITSELF INTO MEDIA POWERHOUSE.

Byline: Andrew Collier Bloomberg Business News

Westinghouse Electric Corp. said it will buy Infinity Broadcasting Corp. for $3.9 billion in stock plus $1 billion in assumed debt, furthering the transformation of the power-plant maker into a media company.

The purchase will unite the nation's No. 1 and No. 2 radio companies and bring together radio's Howard Stern and Don Imus with TV's late-night host David Letterman in most markets. Westinghouse will have 83 radio stations with $1 billion in revenue, making it about three times bigger than its nearest competitor, Jacor Communications Inc.

``Having the dominant position in all top 10 markets is a pretty good deal. There's an incredible amount of cost savings,'' said Tom Price of Heine Securities, Westinghouse's fifth-largest shareholder.

The move comes as Michael H. Jordan, Westinghouse chairman and chief executive officer, was still digesting November's $5.4 billion purchase of CBS Inc. and pushing to separate the company's more promising media business from its industrial operations. With Infinity, Westinghouse will earn about 75 percent of its revenue from media, up from about 60 percent.

``This is our second major step and truly propels us into the big leagues,'' Jordan said.

Westinghouse's rapid expansion, from just 18 radio stations a year ago, is drawing scrutiny from federal regulators. The Justice Department is likely to ask the companies to sell some radio stations in the biggest markets, antitrust lawyers said.

Westinghouse shares fell 3/4 to close at 18 1/8, while Infinity rose 1/2 to 29 1/8.

Westinghouse is exchanging 1.71 shares for each Infinity share for a total of $3.9 billion in stock, or about $32.28 a share. Jordan plans to issue 205 million shares and said it won't dilute earnings because of the additional earnings from Infinity.

Westinghouse is paying a record price in the radio industry - about 17 times cash flow, said Alex Brown & Sons analyst Andrew Marcus. The typical price paid for a radio company is 10 times to 15 times cash flow, analysts said.

At least one shareholder isn't convinced it's the best price. Infinity shareholder Leslie Susser filed a lawsuit in Delaware Chancery Court accusing Infinity officers of breach of fiduciary duty and seeking a preliminary injunction to block the transaction.

Mel Karmazin, Infinity's president, will be named head of all Westinghouse's radio stations and is expected to be named to the Westinghouse board. Karmazin, who will report to Jordan, will hold 2 percent of the company after the acquisition.

New York-based Infinity was founded in 1972 and is home to Howard Stern, whose daily morning show airs in about 30 markets, and Don Imus, whose talk show airs on WFAN in New York and other stations around the country. In Los Angeles, Stern is heard on FM station KSLX, 97.1, which is not part of the deal. Westinghouse's purchase of Infinity surprised analysts, who had expected Infinity, one of the most aggressive buyers in radio, to continue its acquisition binge. The two companies were brought together about three weeks ago by Chase Securities Inc., which represented Westinghouse.

The Westinghouse chairman said there are no plans for another major acquisition.

The transaction comes four months after the signing of new telecommunications law that removed the national limit on radio ownership and doubled - to eight - the number of stations a company can own in the biggest markets, where there are at least 45 stations.

Westinghouse already is the nation's largest broadcaster - with 15 TV stations and 39 radio stations. The company, which received the first radio broadcast license in 1920, owned 18 stations before it bought CBS.

In emphasizing its media business, Westinghouse sold its defense electronics and office furniture businesses earlier this year. Also on the block are its three remaining environmental services businesses.

For now, Westinghouse intends to hang onto its businesses in power generation, nuclear energy systems, communications and electronic security systems, government services and transport refrigeration systems, executives said.

Two weeks ago, Jordan said he would split the company's broadcasting and industrial businesses to unlock the value of the No. 3 CBS network and boost its stock price. The company said it will provide further details of the separation in the fourth quarter.

LOCAL STATIONS The Westinghouse purchase would increase the number of company-owned radio stations to 83 stations - 69 of them in the top 10 markets, including six in Los Angeles.

Infinity Broadcasting Corp.

KROQ-FM (106.7): modern rock.

KRTH-FM (101.1): oldies.

CBS Inc.

KNX-AM (1070): news.

KCBS-FM (93.1): rock 'n' roll oldies.

Westinghouse Electric Corp.

KFWB-AM (980): news.

KTWV-FM (94.7): smooth jazz.

CAPTION(S):

Photo, Box

Photo: (Color) Michael H. Jordan, left, Westinghouse c hairman and chief executive officer, and Mel Karmazin, Infinity Broadcasting CEO, show off cuff links at a meeting Thursday.

Associated Press