NEW YORK (AdAge.com) -- The countdown to $1 billion in cost savings has begun. Yesterday Time Warner?s Turner Broadcasting unit announced a sale of its regional Turner South network to Fox Cable Networks. Turner South will be Fox's 15th regionally programmed cable network. Then today, Turner South founder Ted Turner said he would step down from the Time Warner board of directors.
Both events come just as billionaire financier Carl Icahn ended his proxy fight with Time Warner after management agreed to reduce costs by $500 million in both 2006 and 2007, as well as increase its stock repurchase plan to $20 billion by the end of 2007 and appoint two independent directors to the board. Mr. Icahn had hoped to break up Time Warner into four separate companies.
The sale of Turner South, valued at $375 million, "creates significant financial return for our company," said Phil Kent, CEO of Turner Broadcasting, although the timing of the sale so soon after the Icahn settlement was more coincidental than anything else. Turner had been trying to sell the station since mid-2005; Fox had been considered the front-runner.
Braves not part of sale
The original goal was to sell the Atlanta Braves with Turner South, meaning Time Warner would join the growing list of media conglomerates shedding their sports assets. But Time Warner knew realistically they would likely be sold separately --Fox had already shed the Los Angeles Dodgers in 2004.
Mr. Turner launched the Turner Broadcasting cable TV empire by buying an Atlanta UHF system in 1970, which he six years later turned into a cable station. In 1980, he founded CNN. His Turner Broadcasting group, which was sold to Time Warner in 1995, includes CNN, TBS, TNT, Cartoon Network and Turner South.
"It is after much deliberation that I have decided not to stand for reelection at the annual meeting," Mr. Turner said in a statement. "I have enjoyed working with [Chairman] Dick Parsons as well as the other board members and the management team."
Mr. Turner has been a critic of Time Warner since it merged with AOL. He stepped down as vice chairman in May 2003 and will officially leave the board in May 2006.