Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, August 31, 1995 TAG: 9508310052
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: NE$XW YORK LENGTH: Medium
The Turner board is considering a takeover bid by Time Warner Inc., which sources said is offering stock worth $8.5 billion for the company that flamboyant showman Ted Turner built over the past quarter-century.
Ted Turner is said to support the deal, apparently shelving his quest to add a broadcast network to his cable and entertainment holdings in favor of aligning his company with a much larger enterprise.
But the Turner Broadcasting chairman must convince Tele-Communications Inc., the No. 1 cable system operator that is a big Turner shareholder, to approve the deal. The Englewood, Colo.-based company, which is headed by John Malone, declined comment.
TCI owns about 21 percent of Turner's stock, while Time Warner owns about 18 percent. They each have three seats on the 15-member Turner board, and can veto major deals like this.
Time Warner and Turner confirmed Wednesday they were talking about a Time Warner offer to acquire Turner for stock and make it a wholly owned subsidiary.
They did not disclose terms, however, and cautioned that ``significant issues remain to be negotiated.''
Some analysts said other bidders could appear for Turner Broadcasting, now that Ted Turner has signaled his intention to sell.
Among those mentioned are General Electric Co., which has talked with Turner in the past about combining its NBC division with Turner Broadcasting. Those talks broke off this year when GE and Turner disagreed on who would have majority control.
Another possible bidder is Rupert Murdoch's News Corp., which owns the Fox broadcast network and stations and the Twentieth Century Fox film studio.
But there are obvious advantages to a marriage of Turner with Time Warner.
Turner owns an impressive array of cable TV networks including Cable News Network and the Cartoon Network, while Time Warner has the second-biggest collection of cable systems in the nation.
The combined company would also become a more powerful force in Hollywood, as Turner's production companies New Line Cinema and Castle Rock Entertainment would supplement the output from Warner Bros. studios. Time Warner also owns the Home Box Office and Cinemax pay-TV channels that feature movies.
Time Warner publishes magazines like People and Sports Illustrated, while Turner owns two major league sports teams, baseball's Atlanta Braves and basketball's Atlanta Hawks.
Sources familiar with the deal said Time Warner is discussing offering 0.7 to 0.8 of a share of its stock for each Turner share. At Time Warner's closing price of $42.37 1/2 on Tuesday, the value of the stock swap would be about $35 a share.
Time Warner stock fell 871/2 cents closing at $41.371/2 a share in Wednesday's trading on the New York Stock Exchange. Turner's widely traded Class B stock was up $6.50 at $30.50 a share on the American Stock Exchange. The proposed deal comes on the heels of Walt Disney Co.'s $19 billion agreement to buy Capital Cities/ABC Inc. and Westinghouse Electric Corp.'s agreement to buy CBS Inc. for $5.4 billion.
Ted Turner has coveted a broadcast network for years, and was believed to be trying to raise the financing for a rival offer for CBS.
Time Warner had until recently been negotiating to sell its Turner stake back to Turner Broadcasting in an effort to reduce its $15 billion debt, and had blocked an earlier effort by Turner to bid for NBC.
People familiar with the situation said the Disney-Capital Cities deal drove home the realization at both Turner and Time Warner that they needed to get bigger to compete globally.
Time Warner's chairman, Gerald Levin, visited Turner at Turner's ranch in Montana earlier this month and outlined his plan to combine the companies.
Turner would become a vice chairman of Time Warner under the proposed deal, one of the sources said. That is a position that some analysts feel the entrepreneurial Turner will not fit. But one person who has talked with Turner said Turner realized it would be very expensive to top Westinghouse's cash bid for CBS and he would have had to sell a lot of stock to raise the money.
Turner Broadcasting has its roots in an outdoor advertising business that Turner inherited from his father, and Turner built it over the years by acquisitions and internal development into the industry's showcase property.
by CNB