Time Warner, Turner Boards Close to Vote : Company Town: Directors of each company meet to discuss $8-billion merger proposal. Announcement possible today.

The boards of Turner Broadcasting System Inc. and Time Warner Inc. met into the night Thursday as the companies prepared to possibly make an announcement today that they had reached agreement on a proposed $8-billion merger.

It was unclear whether either side would vote Thursday night on the agreement. Company sources said that reviewing the complex structure of the agreement would probably continue past midnight and that there were many issues to discuss. The Time Warner board gave Chairman Gerald Levin the go-ahead to pursue the deal in August and repeated complications have arisen since.

Under the agreement, Ted Turner, chairman of Turner Broadcasting, would be become vice chairman of Time Warner and his company would become a subsidiary based in Atlanta.

The Turner board meeting began at 3:30 p.m. EDT in the New York law offices of Skadden, Arps, Slate, Meagher & Flom. Turner and several of his board members, including baseball great Henry L. Aaron, walked to the meeting from the Waldorf Astoria hotel, where they were staying.

Turner is said to have enough support on his board to proceed with a merger since a long list of concessions has already been worked out with John Malone, chief executive of Tele-Communications Inc., who, along with Time Warner, controls the Class C voting shares of Turner Broadcasting.

Among other things, sources say, Malone has agreed to convert his 21% equity stake and his voting interests in Turner into nearly 9% of Time Warner, much of which will be put into a voting trust controlled by Time Warner to satisfy antitrust concerns. Time Warner and TCI are the nation’s two biggest cable companies.

While he will not get the dividend he was pushing for on his shares, Malone and other holders of Class C voting shares will receive 16 shares of Time Warner for every 20 they hold in Turner, compared to the 15 shares for 20 that Class A shareholders receive.

Under the agreement, Malone will pay discount rates for 20 years for Turner and Time Warner cable networks such as Cable News Network and Home Box Office, according to sources. Most cable contracts run three years.

Time Warner will also sell Malone the 44% stake in SportSouth owned by Turner. The regional cable sports network, which reaches only about 4 million subscribers, is owned by Turner and Liberty Media Corp., Malone’s programming company.

As part of the deal, the Time Warner board would expand from 15 to 17 seats. Malone, however, would not get one of the two seats on the Time Warner board; those appointments would be made by Ted Turner, sources said. Turner, meanwhile, would give up his seat on the board of Malone’s company.

While Malone’s support is all but assured, sources say Turner is pushing for a consensus of the board to avoid any future backlash against the merger from the cable industry. Two other leading cable companies, Comcast Corp. and Continental Cablevision Inc., hold board seats and represent a group of smaller cable operators. Together they hold a small equity and voting position because of their help in bailing Turner out of financial straits in the late 1980s. Their support is important for national coverage of Turner cable channels.

According to sources, Comcast and Continental have been pushing for concessions to go along with the deal. Sources said any bargains with these parties would probably have been struck before the meeting, to smooth the way to a vote.

Neither Comcast nor Continental’s position going into the meeting was clear.

According to sources close to the negotiations, the agreement, contrary to previous reports, will not call for a shift of HBO to Atlanta. These “management issues,” one source said, would be determined outside the official merger agreement.