The deal with debt-free King World, which markets such TV hits as "The Oprah Winfrey Show," "Wheel of Fortune" and "Jeopardy!", includes $800 million to $900 million in cash from the syndicator's balance sheet, which CBS can use to invest in future projects.

"As they say in television, `stay tuned!'" said CBS Corp president and chief executive Mel Karmazin, who heads the No 2-rated television network, which is nipping at the heels of General Electric Co-owned NBC.

Paul Sweeney, a Salomon Smith Barney analyst, said he thought it was a good deal. "This improves CBS' position as an acquirer of media properties going forward. They have a debt-free balance sheet and this makes it even more so."

In a statement, the companies said under the deal, which is scheduled to close bymid-year, King World shareholders will receive 0.81 CBS share for each King World share.

CBS stock was down more than $1 at $39.75 in midday trading on the New York Stock Exchange. King World's was slightly up at $30.75, close to a year-high of $31.56.

"The deal is worth $2.5 billion, but included in that is $800-$900 million cash which King World has on its balance sheet," Karmazin told reporters in a conference call. "CBS will not use that cash to get interest, but will invest it to grow the company."

The King family, which holds an 18 per cent stake in King World, voted in favour of the deal, as did both boards of directors, the companies said in a statement.

"This is not King World's demise today; it's King World's rebirth," said chairman Roger King, who said the company had been looking at other deals in the past year. With CBS, it will continue to develop new shows as well as sell its stable of established hits in syndication.

"We did talk to other companies, but we chose CBS as the best forKing World," he told reporters.

Under the deal, King and his brother Michael, King World's vice chairman and CEO, retain their posts and report to Leslie Moonves, president and CEO of CBS Television.

Moonves described the King World acquisitions as "the crown jewels of syndication. We are thrilled to welcome King World and its unparalleled programming assets to the CBS family." `Jeopardy!' and `Wheel of Fortune' are produced by Columbia TriStar Television, while `The Oprah Winfrey Show' is produced by Harpo Productions Inc.

Asked about the Kings' and Winfrey's share holdings in CBS as a result of the deal, Karmazin joked: "They have enough shares for me to call them Mr. King and Miss Winfrey."

Pressed, he said the value of their holdings in the network will be "well over $100 million for each of them."

Karmazin and the King brothers were also asked about uncertainty over Winfrey's continuing her show, which is currently in its 13th season. Roger King confirmed Winfrey hadrenewed her contract though the 2001-2002 season.

"When I spoke to her this week, I did suck up big-time as she will be a huge CBS shareholder," Karmazin said. "Obviously anything she wants to do, we would be proud to have her."

Roger King stressed King World would remain an independent entity with the integrity not to hurt other broadcasters just because it was now related to CBS.

"For example, we might go back to ABC and try to get them to renew `Wheel of Fortune' and `Jeopardy!' through 2010."

Despite the acquisition, CBS intends to keep its existing US television distribution arm, EYEMARK Entertainment, giving it what it called "two of the industry's leading syndication companies." EYEMARK distributes "Martha Stewart Living" and is currently selling "Everybody Loves Raymond."

In the quarter ended November 30, "Oprah" accounted for 38 per cent of King World's $194.3 million in revenues, down from 43 per cent in the year-ago period. Distributing "Wheel of Fortune" accounted for 18 per centof the November quarter's revenues, off from 21 per cent in the prior year, and distributing "Jeopardy!" brought in 16 per cent of 1998 revenues, down from 17 per cent in 1997.

"Hollywood Squares" and "Roseanne," which premiered last fall, accounted for a combined 13 per cent of King World's revenues in the November quarter.