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By PHYLLIS FURMAN New York Daily News

NEW YORK -- It's nail-biting time at CBS. Employees are bracing for a wave of lay-offs as the flagging network is set for a big round of cost-cutting.

According to one estimate, the network will pare as many as 200 workers across all of its divisions, though some said the number of lay-offs has yet to be determined.

A good portion of the cuts are expected to come from CBS' news division, where the network reportedly is looking to pare $40 million from its budget.

"It will be a hell of a blow," said one insider. "The news division has nothing left to cut."

Dana McClintock, a CBS spokesman, said the company is "always looking for operating efficiencies."

The network recently canceled one of its news magazines "Public Eye," hosted by Bryant Gumbel, and cut 40 to 50 staffers.

Fear of likely lay-offs has swept CBS' Broadcast Center on West 57th Street for the last two weeks. The network's executives, who are now preparing their budgets for next year, are facing mounting pressure from hard-charging CBS president Mel Karmazin to boost the bottom line.

"Mel comes from a culture of strong cost-consciousness," said Frank Bodenchak, broadcasting analyst at Morgan Stanley Dean Witter.

CBS isn't the only network slicing its payroll. Faced with the double blow of escalating programming costs and declining audiences, NBC also is cutting, and ABC slashed its ranks earlier this year.

"All of the networks are feeling the crunch," said William Croasdale, a network TV ad buyer at Western International Media.

But CBS has especially tough problems because its TV shows appeal to an older audience less desirable to advertisers, and is paying billions to regain rights to NFL games. Partly as a result, CBS is expected to lose $100 million this year.

Reflecting the network's continuing weak performance, Merrill Lynch media analyst Jessica Reif on Monday lowered her 1998 earnings estimate by 16 percent.

The disappointing performance of the TV network has been a big thorn for Karmazin.

He is said to be annoyed that CBS' stock price has been dragged down by the network's showing, even though elsewhere in the company the radio and TV stations are performing well. The stock, which traded as high as $36.18 in April, closed down 5/8 Monday at $27.68.

In recent months, Karmazin has had to squash rumors he is looking to sell off the network to potential buyers, such as Viacom and Bertelsmann.

Although she reduced her profit forecasts, Reif said she expects the network's fortunes to rebound next year, in part because of the expected cutbacks. "We expect a sharp drop in overhead," she said.

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