Turner welcomes $7.5bn Time Warner embrace

DAVID USBORNE

New York

Media giant Time Warner bought Turner Broadcasting System, the owner of CNN, last night in a $7.2 billion (pounds 4.7 bn) deal which will confirm the combined group as the world's largest entertainment empire. Time lost the trophy just weeks ago when Walt Disney bid for the US television broadcaster Capital Cities-ABC.

Yesterday's deal is the latest in a series of mega takeovers and mergers which is dramatically changing the face of the US entertainment industry and its influence worldwide.

But the agreement - a month in negotiations - ran into immediate trouble with US West, the telecoms company which holds a 25 per cent stake in Time Warner's cable business. US West said it would sue to block the merger, claiming that it breached a partnership agreement. The Time-Turner deal will fuse Time Warner's portfolio of music, cable television, publishing and film-making activities with Turner Broadcasting's own range of interests including the Cable News Network (CNN), the Cartoon Channel, two Hollywood studios and the Atlanta Braves football team.

Combined, the two companies are expected to generate revenues that in 1994 would have reached $19.8 billion, compared with $16.5bn for Disney- and Capital Cities-ABC.

For Gerald Levin, Time Warner chairman, the merger is a significant coup, even if its promised benefits are still unproven. Mr Levin has been under heavy pressure to act to lift the fortunes of Time Warner, which has seen its own share value languish recently and has a fearful $16bn in debt.

Most eyes yesterday, however, were on Ted Turner, the flamboyant founder and driving spirit of Turner Broadcasting once known as Captain Outrageous. He is to become a vice-chairman of Time Warner, with rights to designate two board directors, one of whom will be himself. He will also be in charge of all the businesses that are now in his company, CNN, and will oversee Time Warner's Home Box Office cable movie channel.

Asked at an analysts' meeting how he felt about going from being founder and boss to the position of vice-chairman, Mr Turner, whose wife is the actress Jane Fonda, said: "As long as I'm involved in vice, I'm happy."

He added: "I'm tired of being little all the time, I'm nearing the end of my career. I want to see what it's like being big for a while - a chance to see the world from a different place, instead of from the basement, from the penthouse."

Under the deal, Time Warner will buy all of the 82 per cent of Turner Broadcasting that it does not already own in a stock-purchase operation that will be tax-free to the share owners. The company will issue up to 178 million new shares to finance the acquisition. Most Turner shareholders will receive three Time Warner shares for each four Turner share.

The market barely reacted to the news that the marriage was official. But Wall Street media-watchers seemed impressed. "It's a real positive", said William LeFevre, a media analyst at Ehrenkrantz King Nussbaum. "It may take a while for this to gel but it makes Time Warner a much more interesting participant."

The Justice Department is expected to scrutinise the deal for anti-trust implications.

The main obstacle in the negotiations was the fate of the 21 per cent of Turner held by Liberty Media, a subsidiary of the cable giant, Tele- Communications Inc. TCI will hold a 9 per cent stake in Time Warner, but only a 5 per-cent vote, to reduce the risk of triggering anti-competitive objections from the government. The deal was structured to ensure that it would win the support of John Malone, the TCI chairman, and fit with his business plans.

Turner will sell to Liberty its SportSouth interest, a regional sports cable channel, and TCI will have guaranteed access to the programming made by the Turner divisions once folded into Time Warner.

In recent months, Mr Levin, as a major Turner Broadcasting shareholder, repeatedly stymied efforts by Mr Turner to buy one of the three US networks.

Suggested Topics
PROMOTED VIDEO
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Life and Style
fashion David Beckham fronts adverts for his underwear collection
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Soft Developer (4.0, C#, Windows Services, Sockets, LINQ, WCF)

£65000 - £75000 per annum: Harrington Starr: .NET Developer (4.0, C#, Windows ...

C# Developer -Winforms, VB6 - Trading Systems - Woking

£1 per annum: Harrington Starr: A leading financial software house with its He...

C #Programmer (.Net 4.0/4.5/ C#) -Hertfordshire-Finance

£45000 - £50000 per annum: Harrington Starr: C #Developer (.Net 4.0/4.5/ C#, A...

JQuery Developer JQuery, UI, Tomcat, Java - Woking

£1 per annum: Harrington Starr: JQuery Developer JQuery, UI, Tomcat, Java - Tr...

Day In a Page

Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape
eBay's enduring appeal: Online auction site is still the UK's most popular e-commerce retailer

eBay's enduring appeal

The online auction site is still the UK's most popular e-commerce site
Culture Minister Ed Vaizey: ‘lack of ethnic minority and black faces on TV is weird’

'Lack of ethnic minority and black faces on TV is weird'

Culture Minister Ed Vaizey calls for immediate action to address the problem
Artist Olafur Eliasson's latest large-scale works are inspired by the paintings of JMW Turner

Magic circles: Artist Olafur Eliasson

Eliasson's works will go alongside a new exhibition of JMW Turner at Tate Britain. He tells Jay Merrick why the paintings of his hero are ripe for reinvention
Josephine Dickinson: 'A cochlear implant helped me to discover a new world of sound'

Josephine Dickinson: 'How I discovered a new world of sound'

After going deaf as a child, musician and poet Josephine Dickinson made do with a hearing aid for five decades. Then she had a cochlear implant - and everything changed
Greggs Google fail: Was the bakery's response to its logo mishap a stroke of marketing genius?

Greggs gives lesson in crisis management

After a mishap with their logo, high street staple Greggs went viral this week. But, as Simon Usborne discovers, their social media response was anything but half baked
Matthew McConaughey has been singing the praises of bumbags (shame he doesn't know how to wear one)

Matthew McConaughey sings the praises of bumbags

Shame he doesn't know how to wear one. Harriet Walker explains the dos and don'ts of fanny packs
7 best quadcopters and drones

Flying fun: 7 best quadcopters and drones

From state of the art devices with stabilised cameras to mini gadgets that can soar around the home, we take some flying objects for a spin
Joey Barton: ‘I’ve been guilty of getting a bit irate’

Joey Barton: ‘I’ve been guilty of getting a bit irate’

The midfielder returned to the Premier League after two years last weekend. The controversial character had much to discuss after his first game back
Andy Murray: I quit while I’m ahead too often

Andy Murray: I quit while I’m ahead too often

British No 1 knows his consistency as well as his fitness needs working on as he prepares for the US Open after a ‘very, very up and down’ year
Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home