Company Town: Time Warner-Turner Talks : Where’s the Synergy?

A Time Warner Inc. merger with Turner Broadcasting System Inc. would create the world’s largest entertainment and media conglomerate, with the nation’s second-largest cable system, a slew of cable channels, a cluster of movie studios, a strong news-gathering business, divisions in publishing, an animation studio and even a pair of professional sports teams. There are advantages in some cases to the resulting size and mixture of businesses, but some analysts doubt they would produce major cost savings or create the kind of synergies that are fueling this summer’s merger mania. A look at how Time Warner and Turner would combine:

STUDIOS

Time Warner owns the venerable Warner Bros. studio, which puts out about 30 movies a year plus a number of television programs. Warner Bros. also has a well-developed distribution network. Turner owns New Line Cinema, Castle Rock Entertainment--both smaller but strong companies--and the newer Turner Pictures. The combination would be the largest studio cluster and would create products that could drive other units of both companies, but few cost savings are expected.

CABLE TELEVISION

Strong cable channels--including CNN, TNT, TBS and the Cartoon Network--are the heart of Ted Turner’s company. Time Warner owns premium movie channels Home Box Office and Cinemax. A combined company might register more overseas sales of the Cartoon Network by bundling it with HBO and CNN, but bundling would provide little benefit in the United States, where all the channels are already successful.

NEWS

With CNN, CNN International and Headline News, Turner has what is arguably the world’s preeminent television news operation. Time Warner owns print news properties such as Time magazine, Sports Illustrated and Fortune. Time and CNN already jointly conduct news opinion polls and analysts expect few other synergies between the news-gathering operations.

ANIMATION

Warner Bros. has stepped up its animation business to launch a Saturday morning lineup for its fledgling WB television network. Turner’s Cartoon Network could become another outlet for Warner programming. Turner owns animation company Hanna-Barbera Inc.