Time Warner, Turner Appoint Steering Panel

Time Warner Inc. and Turner Broadcasting System Inc. took another step Thursday toward their $6.7-billion merger, naming a seven-member steering committee to integrate the two companies.

In an interoffice memo to Time Warner and Turner staff members, Gerald Levin, chairman of Time Warner, and Ted Turner, the founder of Turner who will become vice chairman of Time Warner, said the committee “will begin immediately to assess and leverage our collective capacities and to make sure our merged company operates in a way that enhances opportunity, efficiency and shareholder value.”

The committee includes three top executives from Time Warner: President Richard Parsons, Chief Financial Officer Richard Bressler and Barry Meyer, executive vice president and chief operating officer of Warner Bros. studio.

The four Turner members of the team are Terry McGuirk, executive vice president and a director; Scott Sassa, vice president of Turner Entertainment and a director; Steven Heyer, vice president of advertising and marketing; and Thomas Johnson, a director who oversees CNN as vice president for news.

“These are all people they want to be involved going forward,” said one executive close to Time Warner. “There will be tough choices to work out and no one at Time Warner has a solution.”

Earlier in the week, the companies signed a revised merger agreement to address concerns of the Federal Trade Commission, which is expected to approve the transaction before the end of the month. Most of the revisions are designed to put more distance between the merged company and Tele-Communications Inc., the leading cable company whose affiliate, Liberty Media Corp., will convert its shares in Turner to become one of the largest stockholders in Time Warner.

TCI’s board also approved the revisions, which would spin off Liberty’s 7% stake in Time Warner into a separate company. Southern Satellite Co., which beams cable programming to other cable services by satellite, would also become part of the new company.

TCI also agreed to give up 20-year agreements to buy Turner services at a discount for its systems. It would still get a 15% discount because of its size.

Separately on Thursday, TCI announced it will buy back 20% of Liberty’s stock. Analysts said it would borrow money to buy back the stock, then spin off the debt and Time Warner shares into the new company.

Transition teams like the one announced by Time Warner and Turner are common with large mergers. The size and complexity of this merger make their task particularly difficult. The companies have different operating styles and structures, with 80,000 employees between them.

Some of the questions to be considered: whether CNN should become part of Time Warner’s news and information group, which includes Time, Money, People and Sports Illustrated magazines, or part of a reconstituted video group that would include all cable networks. At Turner, CNN is not grouped with other cable networks that include TBS and TNT.

Should Home Box Office remain separate because it is the only premium service or should it be clustered with the other cable networks? Should Turner’s Cartoon Network and Turner Classic Movies become part of the entertainment group that controls animation and movie production, headed by Robert Daly and Terry Semel, or remain clustered with other networks?

The group will hold a series of meetings before the merger closes.

“We are now working to schedule our stockholders meetings and close the transaction by mid-October,” the memo said.