Creating an Entertainment Giant : Q & A : A Consumer’s Guide to the Entertainment Deal

Here are questions and answers about the $7.4-billion deal to combine Time Warner and Turner Broadcasting System, creating the world’s largest entertainment company:

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Q: My cable bill already looks like the payment schedule on my first car. Is this merger going to change that?

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A: Parties differ on which way your bill would head.

Ted Turner told a news conference Friday that “cable will be a better value and more people will be subscribing.”

Jerry Levin said that “You will not see your cable rates going up in any irresponsible manner.”

But consumer groups fear that the loss of competition--these companies already reach nearly 50% of the cable-subscribing households in the United States--would eventually drive up rates for cable and broadcast service.

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Q: I am a vidiot of the highest order. Will this deal change my TV viewing habits?

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A: Quite likely. Time Warner and Turner contend that all sorts of connections will be established among existing products: CNN would have access to Time magazine and other Time Warner properties; Bugs Bunny and other characters in Time Warner’s stable could get an airing on Turner’s Cartoon Network. Levin spoke Friday of the “importance of taking something like CNN and Time magazine and putting them in the same company--not for the efficiencies but for journalistic growth.”

Consumer advocates are worried that the company would have too much power over how programming is determined.

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Q: What about movies?

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A: Same deal here. The combined companies now pull in about $1 out of every $4 spent at the box office, giving them great influence over what is made and what it costs.

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Q: Is big better?

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A: The entertainment community clearly thinks so. Walt Disney recently agreed to acquire Capital Cities/ABC Inc. for $19 billion, and Westinghouse Electric Corp. proposed a $5.4-billion buyout of CBS Inc. Some industry watchers believe that the new Time Warner would have the deep pockets to enter all sorts of ambitious ventures. On the other hand, its size might make it more difficult for independent producers. And some critics fear that the combined company’s debt load of more than $19 billion will inhibit its appetite for taking risks.