Time Warner secure despite Ross's death

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The Independent Online
NEW YORK - The future of Time Warner, the global media group, seems assured, despite the unexpected death of its founder, Steve Ross, in the middle of a difficult struggle among competing factions of the corporation's directors, writes Larry Black.

Even as Mr Ross's death was announced on Sunday, Gerald Levin, his co-chief executive, revealed the resignation of eight directors, part of plan to shrink the board from 21 to 12 members and to reduce the influence of insiders.

Throughout Mr Ross's long ordeal with cancer, Mr Levin kept to his strategy of maximising the huge leverage Time Warner enjoys in its main media business, and it is unlikely he will move to dismantle the empire. Despite the dollars 9bn debt that remains from the merger of Time Inc and Warner Communications in 1990, Time Warner generates dollars 1bn in free cash flow, and Mr Levin is under no immediate pressure to sell assets, says Lisbeth Barron, analyst with SG Warburg in New York.

Time Warner has been searching for a joint venture partner in Europe to match the dollars 1bn investment made by Toshiba and Itochu last year, but the recession makes that unlikely. The corporation's main challenge in 1993 will be to retire dollars 3bn worth of costly preferred shares, which it will probably convert to debentures.

It also has the option of monetising some of its minority investments, as it has done with its stake in Hasbro, a big US toymaker. Some analysts speculate that Mr Levin may choose to dispose of its dollars 1.1bn stake in Turner Communications, the cable TV group run by Ted Turner.

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