Despite reports Time Warner's pending acquisition of Turner Broadcasting System might be derailed, the deal's ultimate insider, John Malone, insists it's on track.
As a member of the Turner board with veto power over major changes, the president-CEO of Tele-Communications Inc. has much to say about the $6 billion to $7 billion deal going through.
Mr. Malone said the deal faces two hurdles, one regulatory and the other relating to Time Warner's battle with partner U S West.
On the regulatory front, he said the company is still supplying information to the Federal Trade Commission and he doesn't expect to hear from the FTC about possible antitrust issues until March. The deal may not be finalized until early in the summer.
Also, the Federal Communications Commission is reviewing the voting trust that the deal sets up for TCI's approximately 9% stake in Time Warner. The trust gives voting power of that stake to Time Warner Chairman-CEO Gerald Levin.
"I fully expect that there'll be some changes requested by the government," Mr. Malone said, "and we'll deal with those if, as, and when they come up."
Mr. Malone said he'd like to see Time Warner's problems with U S West resolved out of court and with both companies being able to express on their financial statements the true values in their partnership.
U S West owns 25.5% of Time Warner Entertainment, which includes the Warner Bros. studio and HBO. In addition, U S West has a 50% stake in most of the Time Warner Cable systems. Time Warner wants the entertainment properties back, and has refused to give up control of the cable properties to U S West.
The relationship has soured to the point that the companies are suing each other in court for what each claims are breaches of the partnership.
Mr. Malone's idea for a solution: the creation of two partnerships, of equal size, one controlled 51% by Time Warner, the other controlled 51% by U S West, which might give up its stake in Time Warner's entertainment businesses.
"As a potential shareholder of Time Warner," Mr. Malone said, "what's very important is that these guys get along, that the holdings are on the financial sheets, and that their management be rational and not in conflict."
Copyright January 1996 Crain Communications Inc.