Gates confirms talks on $2bn Turner alliance

MATHEW HORSMAN

Microsoft's founder, Bill Gates, yesterday confirmed he is in talks that might lead to a $2bn multimedia alliance with media mogul Ted Turner's news and entertainment giant, Turner Broadcasting System (TBS).

The news fuelled speculation that Mr Turner, the founder of Cable News Network, may use the alliance to launch a counter-bid for CBS, the US network currently the target of a $5.4bn offer from Westinghouse.

A Microsoft-TBS link would mark the latest in a string of high-profile takeovers and strategic partnerships in the global media sector, including the $19bn purchase by Disney of ABC/Capital Cities and a $2bn alliance between News Corporation and long-distance telephone company MCI.

Speaking on the US talk show Larry King Live late on Monday, Mr Gates said he would consider making an equity investment, which analysts say could reach $2bn, in TBS if "the right kind of interactive venture was worked out between the companies". Mr Gates is believed to be interested in Mr Turner's extensive library of programmes, which might be distributed through the Microsoft Network or through on-demand services currently under development.

Amplifying his comments yesterday, Mr Gates told US network NBC: "It would be inter- esting to see how the interactive world and the broadcasting world might come together. In return, maybe there are some things we could help Ted Turner do." He added, though, that it was far too soon to say how discussions would proceed.

If a deal is concluded, Mr Gates would be expected to support Mr Turner's long-standing ambition to own a large US television network.

Efforts to buy CBS in 1985 failed when Mr Turner was outmanoeuvred by billionaire investor Larry Tisch, now CBS chairman. While some inside CBS would prefer TBS to Westinghouse, Mr Tisch is not among them.

Lending credence to the renewed speculation about a counter-bid, TBS said late on Monday that it would not proceed with a long-expected $1.7bn share-swap purchase of King World Productions, a leading distributor of such US TV programmes as the Oprah Winfrey Show. At the same time, the company looks less likely now to make an offer for the Samuel Goldwyn Company, the rump of Hollywood studio MGM.

In a terse statement, TBS said: "The board met today and discussed several strategic opportunities... The board determined it had no current plans to pursue an acquisition of King World Productions."

The decision could free cash and make it easier to raise finance. This might help Mr Turner to convince his board to back a plan to bid for CBS, or even to join forces with Westinghouse to make a joint offer.

But media analysts in New York said he would have to move quickly, as Westinghouse's bid was already well advanced.

Time Warner, which owns 18 per cent of TBS and has three seats on the 15-member board, had apparently resisted Mr Turner's efforts to put together a bid. It is interested in selling its TBS stake, and may now back a CBS bid if Mr Turner or another buyer agrees to take the shares. Talks about a possible sale of the stake last year to Tele-Communications Corp, another TBS shareholder, foundered when Time Warner insisted on a 60 per cent premium.

Comment, page 17

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