Warner Officers Stand Behind Ross : Would-Be Suitors Warned of Mass Exit if Firm Taken Over

Wall Street may be speculating that Warner Communications will become a takeover target if its planned merger with Time Inc. fails.

But some important Warner managers want it known that an unwanted raider would find their executive suites empty.

“Anyone trying to take over Warner would have to deal with one very serious point. That is, that all key management people--Ahmet Ertegun, Mo Ostin, Bob Krasnow, David Geffen, Terry Semel and Bob Daly--all have key-man clauses tied to Steve Ross,” said David Geffen, whose David Geffen Co. distributes both music and movies exclusively through Warner and accounts for about 20% of Warner’s domestic record volume.

Geffen continued: “If Steve Ross leaves, we all leave. Any hostile move against Warner or Steve Ross, and we would all terminate. We’ve discussed this among ourselves.”

Ertegun, Ostin and Krasnow head divisions in Warner’s highly successful record operation, which accounts for about half of Warner’s operating profits. Daly and Semel are the top officers of the company’s Warner Bros. movie and TV studio.

Adjusting Their ‘Life Styles’

In a similar statement of loyalty issued Thursday, Ertegun claimed to speak on behalf of his fellow record executives, including Doug Morris, president of Warner’s Atlantic Records division. A Warner spokesman declined to comment, and Daly and Semel didn’t return calls.

Even if a hostile raider doesn’t surface, the merger’s possible collapse in the face of Paramount’s rival bid for Time could cost some Warner executives dearly, because it would apparently end an arrangement under which as many as 400 company employees could receive accelerated distributions under a 1986 stock option plan.

“What moves people is what affects them personally. . . . Some people have already adjusted their life style,” one film producer with close ties to Warner said of executive concerns that the accelerated distributions would be scrapped. It wasn’t immediately clear how many shares would be affected by the option plan, which is authorized to issue a maximum of 7.5 million Warner shares.

Warner Chairman Ross is expected to receive an estimated $88 million when he cashes out of various bonus plans on consummation of the merger.

Ross has long been noted for the loyalty he commands among top executives and entertainers such as Clint Eastwood, Steven Spielberg and Barbra Streisand, all of whom have worked closely with the company.

As Ertegun’s statement put it: “In this atmosphere of hostile takeovers, as opposed to the friendly merger which Warner and Time intends to put together, let one thing be clear. . . . We are totally united with Steve Ross, without whose leadership we would not be with the company.”