Might Lose if Holders Voted on Paramount Bid, Time Says
Beleaguered Time Inc. executives sparred with angry shareholders at Time’s annual meeting Friday but conceded that they might be beaten if their decision to rebuff Paramount’s hostile takeover offer were put to a stockholder vote.
Before an overflow crowd of 1,200, Time’s top executives fielded complaints that the directors had tried to duck shareholder input on their proposed $14-billion combination with Warner Communications and their rejection of Paramount’s $12.2-billion bid.
“This deal has been crafted and recrafted without any direct input from shareholders,” said Chester M. Rothman, a shareholder and New York investment executive.
“The shareholders are nothing,” said Anita Barishaw, a shareholder from Englewood, N.J. “We just give the money--we have no say in anything.”
Time Chairman J. Richard Munro insisted that Time’s proposed acquisition of Warner Communications “is the best transaction for all constituents of this company” while Paramount’s offer was “cynical” and “inadequate on its face.”
In prepared remarks, Munro referred to the pressure on directors from the “short-term speculators whose interest in Time Inc. resembles . . . the interest of the fox in the chicken--intense but short-lived.”
But Munro acknowledged, too, that a shareholder vote on the directors’ decision “would have been pretty close.”
Munro alluded to Time employees’ worries that the big publishing and video company--long one of the most generous in corporate America--would be dismembered after the takeover contest.
“I’ve spent a lot of time in the (corporate) cafeteria, and seen the terror in people’s eyes,” Munro said, his own voice trembling. “You won’t believe what its like to be under attack.”
The shareholder meeting, held at a hotel two blocks from Time’s Manhattan headquarters, was attended by hundreds of Time employees, who applauded the executives’ fighting words as they insisted again and again that Time was not for sale.
But in a shift of position, Time executives no longer promised that there would be no layoffs or asset sales after the Warner acquisition to pay off the debts. “We hope we can avoid any layoffs; we hope we can avoid asset sales,” Munro said.
In shareholder balloting, four incumbent directors running unopposed for reelection won 74% of the votes cast, representing about 31.6 million shares, or 55% of Time’s total. Some unhappy shareholders had suggested that shareholders refrain from voting for the directors to show their dissatisfaction.
Shareholder unhappiness may have been evident in a vote on a proposal to elect all company directors each year. Under Time’s current staggered election system, 4 of 16 directors are elected annually to prevent raiders from seizing control of the board in any one year.
The proposal to change the system did not succeed but gained 36.7% of the vote, about twice what it garnered last year. Munro acknowledged that the support for the proposal was “sizable.”
Meanwhile, Warner stock rose 37 1/2 cents to $60.375 on rumors that oilman Marvin Davis is considering a bid for Warner. More than 1.27 million shares were traded. Neither Davis nor his representatives could be reached for comment. Time’s stock fell 50 cents to $155.25, and Paramount declined $1.375 to $59.50.
Separately, Paramount won two small skirmishes in the courtroom. A federal court in Florida denied the city of Casselberry, Fla.'s motion to hold up Paramount’s offer on grounds that the offer allegedly violated local laws governing transfers of cable TV licenses. And a federal judge in Manhattan denied a Time motion to hold up the Paramount bid.
Time had argued that the expiration date of July 7 contained in Paramount’s tender offer was misleading. But Judge Robert W. Sweet ruled that Paramount had informed shareholders that the expiration date would probably be extended.
In Los Angeles, a judge blocked Time’s demand for sworn testimony from MCA Chairman Lew R. Wasserman and President Jay J. Sheinberg as part of a Time lawsuit against Paramount. U.S. District Judge A. Andrew Hauk said the subpoenas ordering the pair to testify were technically flawed and improperly served.