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News > Companies
Time, TBS deal sealed
July 17, 1996: 9:26 a.m. ET

Time Warner, TBS chiefs personally win final agreement
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NEW YORK (CNNfn) -- Federal anti-trust regulators have agreed to approve the $7.5 billion merger between Time Warner Inc. and Turner Broadcasting System Inc., CNNfn has confirmed.
     The Federal Trade Commission is expected to approve the merger on Wednesday, ending months of debate in which several rivals and FTC staff members argued that the deal would negatively impact competition in the cable television industry.
     Objections to the merger were apparently overcome after the companies agreed to three amendments that limit the role of major shareholder Tele-Communications Inc. in the merged company and pledge that Time Warner will act in a non-discriminatory way toward rival cable operators and programmers.
     Under the agreement, TCI Chairman John Malone will cap his interest in the merged company at 9.2 percent, spin off the TCI shares to the company's Liberty Media subsidiary and turn over voting control of his company's shares to Time Warner.
     In addition to pledging it will not infringe on fair competition, Time Warner will delay for six months an agreement that gives TCI a volume discount on Time Warner-Turner programming.
     Last year, Time Warner agreed to acquire Turner -- parent company of CNN and several other cable TV networks -- in a stock-swap deal originally valued at $7.5 billion.
     However, critics have raised antitrust concerns about the acquisition, which would create the world's largest media company.
     Opponents charge that a merged Time Warner-TBS entity could corner the market on cable TV programming and distribution.
     First, the merged company would own many of cable's most popular networks, including HBO and CNN.
     Second, the deal would give Time Warner, the nation's second-largest cable-distribution company, a direct tie to the country's No. 1 cable firm, Tele-Communications Inc.
     Terms of the acquisition would give TCI -- which currently owns 21 percent of TBS -- a 9 percent stake in the merged Time Warner-Turner entity.
     Some reports have indicated that in exchange for FTC approval, the government will require TCI to isolate itself from any dealings with the merged entity's actual operations.
     However, it remains unclear whether TCI -- which has veto power over any changes to the deal -- would go along with such demands.
     As such, the merger's whole future remains in doubt. Time Warner has said the deal will die unless the FTC approves the merger by Sept. 30.
     FTC staffers have reportedly recommended that the agency's five-member governing board oppose the merger.
     But Tuesday, Time Warner chief Gerald Levin and TBS head Ted Turner personally met with FTC board members to lobby for the deal's approval.
     The FTC board plans to take up the merger at a meeting Friday, but is not required to vote at that time on whether to approve the deal.
     Time Warner, TBS and TCI lawyers have been meeting for weeks with FTC staffers to try to work out a compromise.Back to top





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