ROANOKE TIMES 
                      Copyright (c) 1996, Roanoke Times

DATE: Thursday, July 18, 1996                TAG: 9607180055
SECTION: BUSINESS                 PAGE: B-6  EDITION: METRO 
DATELINE: WASHINGTON 
SOURCE: Bloomberg Business News 

TIME WARNER, FTC REACH DEAL TURNER PURCHASE TO BE CLEARED

Time Warner Inc. said Wednesday it has reached a last-minute compromise with the Federal Trade Commission's staff on its proposal to buy Turner Broadcasting Systems Inc., clearing the last major hurdle to the $7.5 billion purchase.

The agreement limits the clout of Time Warner and Tele-Communications Inc., which together control 40 percent of the cable TV industry. TCI Chief Executive John Malone, a big Turner investor, agreed to take nonvoting shares in Time Warner and put that 9 percent stake in a new company. And Time Warner pledged to compete fairly.

That satisfied FTC staffers, who had balked at allowing the two largest cable companies to get too cozy. The five FTC commissioners are expected to approve the agreement as early as next week, clearing the way for Time Warner to wrap up its yearlong quest to become the country's largest media company.

``This is an agreement everyone can live with,'' said Larry Haverty, senior vice president of State Street Research, which owned 2 million Time Warner shares at the end of March.

Shares in New York-based Time Warner rose 33/8 to 365/8 on trading of 3.1 million, triple its three-month daily average of 902,100. Turner's Class A shares rose 23/4 to 261/2 and TCI gained 5/8 to 15.

Time Warner is likely to call for a shareholder vote on the merger, if approved by the FTC, in October or November, said Merrill Lynch & Co. analyst Jessica Reif.

Last night's 10:30 p.m. compromise, which wrapped up six weeks of intense talks, was struck two days before FTC commissioners were scheduled to vote whether to grant the agency's staff the authority to block the merger by requesting a temporary injunction.

The acquisition would link Tele-Communications and Time Warner, which produce two of cable TV's most popular channels - Turner's Cable News Network and Time Warner's Home Box Office - and movie studios such as Warner Brothers and Turner Pictures.

In the year since the merger was announced, the Time Warner-Turner combination has been dogged by questions about its impact on competition for cable distribution and programming.

For example, Time Warner and TCI could refuse to make their cable systems available to new channels. Or Time Warner could charge excessively high rates for distribution of Home Box Office or CNN.

A major sticking point in negotiations with the FTC staff was the role of Englewood, Colorado-based Tele-Communications, which owns 22 percent of Turner. The FTC wanted an agreement limiting TCI's Malone from increasing his stake in Time Warner at a later date.

TCI has agreed to place its 9 percent stake into a company to be spun off from Liberty Media, an affiliate that owns the Turner shares, Liberty Media said.

LENGTH: Medium:   67 lines
ILLUSTRATION: PHOTO: AP    Turner Broadcasting Chairman Ted Turner, left, and 
          Time Warner CEO Gerald Levin shake hands. The Federal Trade 
          Commission has agreed to approve Time Warner's $7.5 billion purchase
          of Turner Broadcasting Systems, which will create the world's 
          largest media company.