So, Your Company’s About to Merge. . . : Consultants Offer Advice to Time Warner Chief as He Prepares for Deal With Turner

Move fast, make a plan and make nice.

That’s some of the advice management consultants have for Gerald M. Levin, chairman of Time Warner Inc., as his company plans its merger with Turner Broadcasting System Inc.

As head of the world’s largest entertainment company, Levin would command a formidable array of assets, including Home Box Office, Cable News Network, Warner Music Group, Warner Bros. Studios and the second-largest cable distribution system in the United States. As a major provider of entertainment content, the combined company would be poised to capitalize on burgeoning interactive technology as well.

But first, experts say, Levin must resolve the sticky management issues that arise in any merger--not to mention one valued at $7.4 billion. Executives from both companies will probably butt heads and battle for turf. Employees will be anxious about their careers and about the direction of the company. Investors will want quick evidence that the merger would not just cut costs but also that it would boost revenue. Business customers, worried they may get lost in the shuffle, may flirt with competitors.

Levin, who played a key role in the 1989 merger that created Time Warner, has not always handled these issues with flair or dispatch. Wall Street has been impatient with Levin’s efforts to reduce the company’s towering debt and skeptical of his vision that cable will be the dominant distribution system in the future.

Critics have also questioned Levin’s ability to produce synergies with the various divisions of Time Warner. The executive was widely criticized for not putting a stop to nearly a year of management intrigue and turmoil at industry-leading Warner Music.

The merger still must pass muster with shareholders and with federal regulatory authorities. But if the merger goes through, Levin’s mixed record as the manager of an already complex company raises the question: Can he make an even more complex company work?

Thus, a few tips from management consultants across the United States:

1. Move fast (but don’t be reckless). Investors and analysts will probably give Levin no more than one fiscal quarter--90 days--to develop, articulate and begin implementing a strategic plan for the combined company, said Mark L. Feldman, mergers and acquisitions specialist at William M. Mercer Inc.

“They want to know what management will do to drive revenue, profit margins and cash flow,” Feldman said. If such a plan isn’t in place three months after the merger is completed, shareholders will get itchy and analysts may move toward “hold” or “sell” recommendations, he added.

On the other hand, don’t move too quickly.

“The faster you make decisions, the quicker you can make mistakes,” said Walter D. Scott, professor of management at the Kellogg Graduate School of Management at Northwestern University.

2. Make nice. Time Warner executives sometimes had a hard time working together before this merger. With iconoclastic cable baron Ted Turner thrown in the mix, the atmosphere at the media behemoth could be more combative than ever.

Levin should quickly decide who will be on his top team and then get those people collaborating. Scott recommends joint task teams, made up of decision-makers from each company.

Such a move “is more likely to reduce the number of water-cooler-type conversations about who’s in and who’s out,” Scott said. Unfortunately, both companies are “still experiencing issues of these kinds from previous mergers.”

3. Be flexible. The new Time Warner will be such a huge entity that expecting companywide conformity would be ridiculous, said Michael J. Wolf, partner at Booz, Allen & Hamilton in New York.

“Media companies are always sort of a patchwork quilt of different cultures,” Wolf said. Trying to instill the same corporate values everywhere may end up “destroying entrepreneurship and creative spirit.”

4. Reassure employees and customers. Merged companies typically aim for a 20% reduction in costs, much of it from payroll, Feldman said. In this case, however, Levin and Turner have said they expect Turner to continue to run his enterprises as a subsidiary without huge job cuts.

Nevertheless, fears about cuts can lead to job anxiety from the executive suites to the mail room, hurting productivity and morale.

Levin could stem some of that anxiety by openly communicating with employees, convincing them early on that the merger is good for both companies.

Similarly, “[corporate] customers worry about whether or not they will get the same level of service or attention as before,” Feldman said. “Customers have to be contacted immediately . . . in person” and be reassured that their needs will still be met.

5. Get used to the spotlight. Any company with commanding shares of the cable, movie, music and magazine businesses is going to attract plenty of attention, some of it critical or even hostile. Effectively handling crises--and triumphs--is going to take an executive with an unfailing sense of public relations.

Here, Levin could easily be upstaged by one of his putative employees, experts said.

“Levin is not a very public guy,” observed Everett Dennis of the Freedom Forum Media Studies Center at Columbia University in New York. “Turner is. He’s used to getting out there and speaking his mind.”

6. Be Realistic. Miracles won’t happen overnight. Time Warner’s problems won’t disappear just because the company merged with Turner. And vice versa.

As Dwight Gertz, vice president at Mercer Management Consulting summed up: “It is extraordinarily time-consuming, difficult and painful to merge giant corporations.”