Time Warner merger approved

After weeks of nervous delay, the mega-merger between Time Warner and Turner Broadcasting to create the world's largest media giant, surpassing even the Disney Company, is set to be formally approved by United States regulators.

Time Warner announced that staff members of the Federal Trade Commission, who had been holding up final consummation of the $7.5bn (pounds 4.9bn), had agreed in principle to give it their blessing. A vote formalising the approval could be taken by the FTC commissioners as early as tomorrow.

Time Warner was the world's largest media company until the acquisition of Capital Cities-ABC, the US television network, by the Disney Company last year. By absorbing Turner Broadcast, Time Warner, headed by Gerald Levin, will now vault back into the number one position.

The announcement came at the end of weeks of tense negotiations between the companies and the FTC regulators over concerns that the merger, first announced last September, would lead to an unacceptable restriction of competition in the industry and notably inside the cable television sector.

The close scrutiny by the FTC had raised the spectre of the merger becoming unravelled. Such an outcome would have been a tremendous setback, especially for Mr Levin and Ted Turner himself. Most analysts had stuck to their belief that in time the FTC would stand back and allow the merger to happen. It is likely now to be finalised in September.

"It came sooner than I think people were anticipating given the complexity of the deal and the parties involved," commented Jill Krutick, an entertainment analyst at Smith Barney in New York.

The principle focus of the FTC inquiry concerned the future role of Telecommunications Inc (TCI), the largest cable operator in the United States. The Colorado- based TCI, whose outspoken chief executive is John Malone, currently has a 21 per cent holding in Turner Broadcasting and will emerge from the merger with a 9 per cent stake in the new Time Warner.

Time Warner is the America's second-largest cable operator and owns the Warner Bros film studio, Time magazine and People as well as its record labels and the HBO cable channel.

The FTC deal will outlaw several concessions that had been offered to TCI, including the opportunity to carry Turner Broadcasting material, including the CNN news channel, at reduced rates. Time Warner will also be forbidden from discriminating against competing cable distribution companies in the supply of content.