Shareholders overwhelmingly approved Time Warner Inc.'s $7.5-million acquisition of Turner Broadcasting System Inc. on Thursday in a deal that vaults Time Warner ahead of Walt Disney Co. as the world's largest entertainment company.
The marriage combines some of the best known entertainment brands in the world: Time Warner's cable systems, HBO cable channel, the Warner Bros. movie studio, the Time Inc. magazines--including Time, People and Sports Illustrated--with Turner's Cable News Network, Cartoon Network, Hanna Barbera cartoon studio, Turner Classic Movies, New Line and Castle Rock movie studios, and the Atlanta Braves and Atlanta Hawks pro sports teams.
"The long march of Time is now complete," Time Warner Chairman Gerald M. Levin told shareholders in the Time & Life Building at Thursday morning's special meeting to vote on the deal. After more than a year of work on the complex transaction, Levin said that he and his executive corps would now focus on operating the company.
Levin and the company have come under increasing heat from Wall Street because the stock has stagnated for years. But Levin said "the stars are aligned" for an improvement.
Oddly, one of the most pressing tasks facing the entertainment industry's new No. 1 may be working its way back into the No. 2 spot.
Laden with $17.5 billion worth of debt--the bulk of it associated with its cable-TV holdings--Time Warner is contemplating selling assets to trim its burden of interest and preferred-stock payments.
Levin acknowledged that "de-leveraging" is one of the top items on the agenda.
"We're going to cut millions of millions of dollars and, like Superman, we're going up, up and away, in terms of ratings, magazine subscriptions, movie box-office share," Ted Turner, chairman of Turner Broadcasting and new vice chairman of Time Warner, told reporters after the meeting. The companies have projected hundreds of millions in savings and estimated that about 1,000 jobs will be cut after the merger.
Among the assets that may be sold is Turner's New Line Cinema movie studio, according to Warner Bros. studio chief Robert Daley, who said an investment banker has been hired to explore options.
Turner had been thought to be against such a move, but Daley said in an interview, "Ted is not opposed to looking at selling a portion of it, and nobody has made a determination yet on how much we're going to sell."
A way to achieve more significant debt reductions, analysts said, would be to give up control of the cable business to its partner, US West Inc., a move that Levin has only recently become willing to consider.
Analyst David Londoner of Schroder Wertheim & Co. said there is a "real incentive" for both parties to reach an accommodation, but their relationship is so complex that a quick agreement is unlikely.
Time Warner shareholders in the morning and Turner shareholders in a separate afternoon meeting voted in favor of the deal. With estimated 1996 revenue of $21 billion, the combined company edges ahead of Disney, with revenue of about $19 billion.
Shares of Time Warner gained 25 cents in trading on the New York Stock Exchange to close at $41.375 on Thursday. Turner Class A stock was up 25 cents, closing at $31 on its last day on the American Stock Exchange. "We're going out on a high," said Turner, noting that the shares had cracked the $31 barrier for the first time.
Turner holders will receive three-quarters of a share of Time Warner for each Turner share.
There was some criticism voiced at both meetings. One stockholder questioned the $50-million fee to be paid onetime junk bond king Michael Milken for advising Turner on the deal. Turner himself is paying $10 million, and Levin said Time Warner will respect the agreement and pick up the remainder.
Staff writer Jane Hall contributed to this report.
* TURNER TOES LINE
On his first day in new role, Ted Turner showed his statesman side. D4