Turner-Time Warner Merger a Done Deal (Unless It’s Not)

Since September, Turner Broadcasting System Inc.’s stock has been delisted from the American Stock Exchange, about 1,000 workers have been given pink slips and the team that shepherded its merger with Time Warner Inc. has moved on to other matters.

“The merger has taken place,” says Robert Joffe, a New York lawyer who represents Time Warner.

But you’d never know that from the mail room of the Federal Trade Commission, where the agency is reviewing a stack of complaints from nearly a dozen individuals and groups--from Los Angeles filmmaker Jamaa Fanaka to the Fox News Network--protesting the FTC’s preliminary approval of the merger in October.

In a curious quirk of federal regulatory procedure, the FTC is sifting through the comments to determine if there is any basis for vacating the agency’s Sept. 12 order approving Time Warner’s $7.5-billion acquisition of Turner. A decision is expected next week.

The FTC approved the controversial deal, which vaulted Time Warner ahead of Walt Disney Co. as the world’s largest entertainment company, following a lengthy investigation, and Time Warner’s shareholders gave their thumbs up a month later.

Since then, however, the FTC has heard from New York City officials angry over Time Warner’s refusal to carry the fledgling Fox News Channel on its New York cable system, as well as from Consumers Union and other advocacy groups upset that the FTC did not go far enough in addressing their concerns that the merger would reduce competition in the cable TV industry.

In its order granting the merger, the FTC “fails to fulfill its duty . . . to prevent the substantial reduction of competition,” the consumer groups said.

In most instances, such last-minute public comments are mere formalities, Time Warner executives and experts say.

“We are confident the merger will be approved,” said Ed Adler, a spokesman for Time Warner. “We are already four or five months into the process and a lot of integration [of the two companies] has taken place already.”

“I would be astonished if the Federal Trade Commission would vacate its order; they’ve stopped so few mergers in the first place,” said Charles E. Mueller, a former FTC staffer who is now editor of Antitrust Law & Economics in Vero Beach, Fla.

Nevertheless, he added, in evaluating planned mergers, “once you scramble the eggs, it’s hard to undo them.”

There have been a few instances where the FTC reversed itself at the eleventh hour--such as when it vacated its approval of Nestle Co.’s planned acquisition of Stouffer Corp. in 1975, FTC officials said.

William Baer, the FTC’s director of the bureau of competition, added that “based on historical experience, more likely than not [the Turner-Time Warner merger] is going to turn out approximately just like it has.” But he added that “there is no guarantee that the commission will ultimately approve the deal.”

That’s heartening to filmmaker Fanaka, who filed a two-page protest with the FTC asking that the agency block the merger.

Fanaka, who founded the Directors Guild of America’s African American Steering Committee and has written widely about discrimination in Hollywood, alleges that both companies are in breach of a guild collective-bargaining agreement that requires studios to make “good-faith efforts to increase the number of ethnic minority directors working in the industry.”

Time Warner and Turner have denied the allegation.

Although Fanaka wrote to the FTC in June, well before the agency reached its preliminary decision approving the merger, he said he wasn’t contacted by the agency until the fall. But Fanaka said he doesn’t feel shortchanged by the FTC.

“They have told me that they will take my comments seriously and . . . that the public comment period is a vital part of their decision making,” he said. “I and the rest of minority filmmakers don’t realistically think we are going to stop the Time Warner merger,” he continued. “In fact, we want both companies to be healthy and we want both to succeed. . . . We just want the FTC” to be a mediator and “help open up the system to creative people.”