Creating an Entertainment Giant : MANAGEMENT CHALLENGES : To Sweet Synergy, Via Rocky Road

To attend Friday’s formal news conference announcing that Time Warner Inc. plans to buy Turner Broadcasting System Inc., Alan Horn, chief executive of Turner’s Castle Rock Entertainment unit, hitched a ride to New York on a Warner Bros. jet, one of Hollywood’s premiere perks.

“I saved $2,800 on my fare. We’re already doing what we can to have synergy and to explore opportunities to save money where it makes sense,” Horn deadpanned.

Joking aside, the biggest challenge facing Time Warner and Turner in the $7.4-billion merger deal won’t be who gets a seat on Air Warner, but rather who shares the seats at the table when it comes time to influence the direction of what would become the world’s largest media company.

Even if the deal ultimately goes through, stitching together two divergent organizations that resemble a United Nations of corporate cultures will be no easy task. Under the same umbrella would be a mosaic of companies as diverse as magazines Time and Sports Illustrated; Warner Bros.; Atlantic Records; New Line Cinema; Castle Rock Entertainment; Cable News Network; the nation’s second-largest cable TV operator, Home Box Office; the Atlanta Braves, and even campy World Championship Wrestling.

Both companies are full of talented, turf-protective executives. None lack in ego, and many carry longstanding grudges. It’s no secret, for example, that Warner music chief Michael Fuchs is barely on speaking terms with the co-chairmen of Warner Bros., Robert Daly and Terry Semel. There also are said to be strained relations between Turner’s New Line film distributor and its Castle Rock movie and TV production unit.

The deal raises newer questions: Can a lean, fast-moving operation such as CNN led by Tom Johnson mesh with Time Warner’s more staid magazine operations led by Norman Pearlstine? Will Turner move to media capital New York, or be content to work from his longtime base of Atlanta and amid the 4,000 buffalo at his Montana ranch?

Even as the Warner and Turner executives assembled early Friday evening for a post-announcement bash at New York’s posh 21 Club, the overriding question was whether Time Warner Chief Executive Gerald Levin can make it all work and get a mercurial group of executives in step.

“Jerry Levin’s first challenge will be to sort out all of the managerial mischief,” said an industry insider with longtime ties to Time Warner. “This is going to create a drama that will make Hamlet look tame. There are too many parts to stay in the same shape.”

One Time Warner director argued that the deal significantly strengthens Levin’s hand at dealing with the insurrections that have plagued some of Time Warner’s operating units in the past.

With the company so large, the director said, executives are not as indispensable as they might have once thought. In addition, the company is attracting additional executive talent from Turner, and with its size should have no trouble recruiting capable executives to replace any rogues who overplay their hands.

“The game changes internally,” the director said. “I think to some extent it will be easier for Jerry. Anybody who doesn’t want to play is just not going to have the cards. It’s not going to be a situation where any individual can get in the way of this operation. When Jerry draws the line now, it’s going to be a very serious line.”

As one Turner executive suggests, “This puts Jerry in a much stronger position than he was--there’s a different critical mass--he can now bat anybody down that he wants to.”

Still, executives at Time Warner and Turner said a host of management issues have yet to be addressed. The big questions remain on where the center of gravity would fall, particularly between the two key players, Levin and Turner Chairman Ted Turner. Both are used to running things.

The contrast between the two men couldn’t be greater. Levin is a cerebral type who studied biblical literature at Haverford College and who plays things close to the vest. He works exceptionally long hours, is distant in style and lacks charisma.

Turner, by contrast, is someone who for years never met a party he didn’t like, earning the nickname “Captain Outrageous” and “The Mouth of the South.” Building his organization by pinching pennies, Turner used to ask fans at Atlanta Braves games to throw foul balls back so they could be used again. He staged ostrich races at a Braves game, driving one chariot himself. During recent negotiations, he was reported in the New York tabloids to have dressed in a Confederate uniform, brandished a sword and ordered that the deal conclude, something that Turner executives said is true.

“I think they make a very good team because they will complement each other,” said Warner Bros.’ Daly, noting how the relationship between the two executives goes back more than 20 years.

“Ted is a visionary and he really pumps people up. . . . He has a great energy level and imagination. . . . He’s like the captain of a team. He really gets you going,” he noted. “Jerry is a strategist. He knows how to execute and get things accomplished. Jerry comes to the office every day; Ted doesn’t. He travels the world and is the world’s best salesman.”

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The planned merger appears to have diminished the role of Fuchs, who had previously been amassing influence within the company since May when he took on added responsibility as chairman of Time Warner’s music group as well as head of HBO.

Fuchs is said to be furious with some of the details. Levin has moved to put HBO, which Fuchs built into the nation’s elite pay television service, and all of TBS under one roof: Time Warner Video Division. Turner would head that division and have “supervisory” responsibilities for HBO. It was unclear whether that means Fuchs’ entire role at HBO has been severed, but sources inside Warner Bros. said it was “very clear” that Fuchs is now responsible only for the music company.

The change appears to spell good news for Fuchs’ West Coast rivals, Daly and Semel, who have long clashed with Fuchs in management styles and personalities. With Fuchs responsible only for music, a much-desired distance has been put between him and the two studio chiefs who oversee Warner Bros. film and TV.

There was speculation in some Hollywood circles that an unhappy Fuchs may now leave the company.

“He was very quiet today [Friday],” said a Time Warner source who observed him at the news conference. In the past few weeks, however, Fuchs has told people privately that he enjoys the music unit and looks forward to running it.

There have been ongoing rumors that Semel will resign at the end of the year, when he supposedly has an out in his contract with the studio, most likely to be chairman of MCA Inc. It is unclear whether the merger would make Time Warner more or less attractive to Semel, who refuses to comment on the matter.

But both Semel and Daly said they were ebullient about the deal. “We’re both very, very excited; it’s a big plus for this company,” Daly said in a phone interview from New York.

Semel added that the merger represents “a terrific combination of assets that will enable Time Warner to grow aggressively throughout the world.”

So, too, were Turner executives. Turner film chief Scott Sassa said that “as a shareholder, director and employee, this is something that benefits each one of those relationships I have with the company.”

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Amy Pascal, president of Turner Pictures, added, “We’re starting a bunch of pictures, and everyone [within the company’s Atlanta-based parent, Turner Broadcasting] has told me that this will make us a much stronger company.”

Daly, who has been at Warner Bros. for 15 years, said that on a strictly personal basis, the merging of the companies fulfills one of his longtime dreams, which is “to have back all of our [Warner’s] heritage under one roof.”

The acquisition of Turner would put Warner’s pre-1950s library, which includes such classics as “Casablanca” and pre-1948 cartoon characters such as Bugs Bunny and Daffy Duck, back in Warner’s hands.

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