NBC Reportedly in Talks to Buy 25% of Turner Broadcasting

NBC, on the prowl for new outlets for its huge inventory of TV programming, is proposing to purchase a major stake in Turner Broadcasting System, according to executives close to the companies.

But the offer will succeed, executives say, only if NBC can persuade the 18 cable firms that last June bought a 37% stake in the company that the deal won’t jeopardize the independence of the cable and broadcast concern.

NBC has proposed to buy up to 25% of Turner, which would make the network nearly as powerful as the cable consortium. Founder and Chairman Ted Turner holds 51% of the company’s voting shares but must receive approval from the cable operators for any major strategic decision.

The NBC deal “would bring in new money, and we’re all in favor of that,” said Timothy P. Neher, a TBS board member and president of Continental Cablevision. “The question is, what kind of role would they want in programming? We want the company to continue to put on strong, exclusive programming.”

Turner Broadcasting owns WTBS, the Atlanta “superstation,” Cable News Network and CNN Headline News. The company is planning another cable network, called Turner Network Television, or TNT, that would offer original entertainment and sports programming, including special events.

Could Boost Business

The new network would thus be a strong competitor with the networks. Analysts say the cable shareholders may fear that NBC would stymie the development of a strong potential competitor.

The cable operators believe that TNT’s success could give a boost to their business at a time the strength of the advertising economy is in question, they say.

NBC officials have declined to provide details of the talks, although a spokesman acknowledged: “It’s no secret that NBC is interested in developing a relationship with the cable industry. We have met in the past and will continue to meet with them.”

A spokesman for Turner Broadcasting declined to comment.

NBC President Robert C. Wright, a former cable company president and longtime friend of Ted Turner, has spoken publicly of his desire for an alliance between cable and NBC. He has said that NBC has more program production capacity than it can use with its limited air time and should use the cable industry as a regular programming outlet now that cable television reaches 50% of American homes.

“Cable needs product, and we do an excellent job of producing it,” he said at a cable industry meeting in New York last month.

The sale of a stake would provide needed cash for TBS. The company, carrying $1.4 billion in debt after last year’s purchase of MGM/UA and other expenses, was forced to sell the stake to the cable firms last June.

The company’s financial situation is stable for the moment, but TBS is scheduled to pay holders of preferred shares a $35-million dividend next April, analysts say.

The company’s recent financial problems have also brought talk about a buyout of Turner himself. The entrepreneur’s critics fault him for paying too high a price for MGM/UA and for his costly attempt to take over CBS Inc. in 1985.

Sources close to the company trace such talk to the two largest cable shareholders, Tele-Communications Inc. and American Television & Communications Corp., a unit of Time Inc. But other cable shareholders want Turner’s continued presence at the company, citing his programming savvy and his presumed ability to mediate between the large interests that now have a stake in Turner Broadcasting.

“Ted Turner may be a critical asset to have in the middle, to make sure nobody gets too strong,” said Brian Roberts, executive vice president at Comcast, which is the nation’s sixth-largest cable operator and a TBS shareholder.

And if NBC does buy a stake, Turner’s major shareholders will include powerful rivals. Both NBC and Time Inc. have sought to buy Turner’s CNN, and Time Inc. is also known to be interested in using its capabilities as a publisher to generate programming.

Meanwhile, Turner associates insist that he would strongly resist any attempted ouster. TBS “is Ted’s baby, and he isn’t planning to go anywhere,” said Peter A. Dames, a close friend of Turner’s and a former TBS board member.

Analysts say NBC would probably not want to buy all of Turner Broadcasting, even if it were given the opportunity. If it did so, the cable operators who now hold stakes in the company would have less of a financial interest in carrying NBC’s programming, said John Tinker, an analyst with the investment firm of Morgan Stanley & Co.

“It’s a delicate balance,” he said.