Warner Chief Would Receive $180 Million in New Time Deal

Warner Communications Chairman Steven J. Ross will get a windfall of $55 million if Time Inc. succeeds in acquiring the entertainment giant for $14 billion rather than proceeding with the originally proposed merger through a stock swap.

If Time buys Warner for the proposed $70 a share, Ross stands to receive $180 million for his holdings in the company. That compares to the $125 million that Ross stood to make under the earlier stock-swap deal.

The calculation emerged over the weekend as analysts more closely scrutinized the deal. Separately, Time disclosed more information about deliberations in the nine days leading up to the acquisition proposal that was prompted by Paramount Communications’ hostile bid to purchase Time.

Time and Warner first proposed a merger in early March that would create the world’s largest media and entertainment company. Time owns such notable magazines as People, Money and Sports Illustrated as well as the nation’s second largest cable television company and the Home Box Office pay-television company. Warner owns cable TV systems in addition to its namesake motion picture studio and the industry’s most profitable recorded music business.

Warner spokesman Geoffrey W. Holmes confirmed the $180-million calculation for Ross’ holdings, but noted that Ross’ annual compensation will be lower in the years following the merger because the new deal requires Time to assume so much debt. Ross and other top executives already had agreed to peg their bonuses to the combined companies’ pre-tax earnings, which is a sum derived after interest payments.

If the new Time-Warner merger is completed, Ross probably will receive about $80 million in a lump-sum payment, with the remaining $100 million paid out over almost eight years, Holmes said. The Warner spokesman underscored the fact that Ross’ actual employment contract hasn’t been changed.

In a document filed at the Securities and Exchange Commission, Time disclosed a number of the options presented to its 12-member board before the directors unanimously rejected Paramount’s offer and voted to bid for Warner.

But just in case the merger with Warner is not consummated, Time has asked its financial and legal advisers “to continue to explore the feasibility and desirability of various . . . courses of action,” including the options outlined last week.

Those options ranged from a bid for Paramount, or certain other unidentified companies, to various restructuring plans for Time itself. A financial restructuring might include payment of a substantial dividend to Time shareholders, or Time might repurchase its own shares. Yet another alternative would be to place Time’s businesses in a joint venture with a third party, the document said.

Time also disclosed payment of $6 million each to its financial advisers, with another $10 million payment due to each by Feb. 14, 1990. The two firms are Wasserstein Perella & Co. and and Shearson Lehman Hutton Inc.

Time said in the filing that its 82%-owned cable TV company, American Television and Communications Corp., filed suit Friday against Paramount in Connecticut. The cable TV company alleged that it might be forced to breach some of its cable franchising and financial agreements if Paramount completes its tender offer for Time before obtaining certain governmental approvals.