Main Men: The Time Warner-Turner Deal Will Create the World's Biggest Media Company
Roberts, Johnnie L., Newsweek
TIME WARNER'S DEAL TO SWALlow up Turner Broadcasting hadn't even been finalized, and already Time Warner executives were trading Ted Turner stories. The favorite: how the billionaire had once asked some of his directors how many times a day they had sex. Before long, Time Warner guys had their own stories to tell. One had a phone call with Turner abruptly cut off when Turner blurted out that he had to go make love to his wife, actress Jane Fonda. Now Turner is set to become vice chairman of Time Warner after it takes over his company, a move regulators approved preliminarily last week. Is the Time Warner crowd worried about life with the mercurial cable visionary? Not that they acknowledge.
Gerald Levin is one reason. The Time Warner CEO, who engineered the $7.5 billion deal, will remain the man at the top. But there are two other reasons for peace of mind: Bob Daly and Terry Semel, co-CEOs of Warner Bros., Time Warner's globe-girding entertainment empire. With the deal scheduled to close by this fall, they are set to take on arguably the most important role in making what will be the world's biggest media company work. (Revenue: more than $20 billion.) Their mission will be to meld the two corporations' prized entertainment assets and make them pay off big time for shareholders.
Few doubt they can do it. During the 16 years the duo has run Warner Bros., the studio has regularly drawn the biggest worldwide audience for its movies, supplied the most prime-time TV shows and attracted the biggest stars. The studio operation is on course to post its 14th straight year of higher earnings. "It's hard to find a more consistently successful group in the motion-picture business," says Bert Fields, the powerful Los Angeles entertainment lawyer. Warner Bros. is dominating the summer box office with "Twister" and "Eraser," and its TV shows "Friends" and "ER" are huge hits. Last year it launched a new network, WB. Daly and Semel also oversee Six Flags theme parks, Bugs Bunny and Batman, and the giant Warner Music Group. Once Turner Broadcasting joins the family, Daly and Semel's empire will include the Cartoon Network, TNT, Turner Pictures, the MGM film library, Hanna-Barbera cartoon stars (the Flintstones and Yogi Bear) and movie studios New Line Cinema and Castle Rock. In addition to the showbiz operations, the merger will bring together Time Warner's magazine-publishing empire (including Time, People and Fortune) with Turner's CNN. Daly and Semel, Levin told NEWSWEEK, are "crucial to the future" of the company.
Until last week, that future seemed cloudy. Skeptics believed that Levin's move to buy Turner would falter, never to win approval from antitrust authorities at the Federal Trade Commission. The FTC was concerned about the pivotal role of John Malone and his cable empire Tele-Communications Inc. and Liberty Media. As a major owner of Turner stock, he would become a big owner of Time Warner after the deal, concentrating too much industry power under one roof. But the FTC blessed the new behemoth after moving to limit Malone's role (he can't vote on Time Warner matters or get a 20-year discount on Turner programming to TCI).
Power struggle: Whew! Levin needed that victory. Since the 1989 transaction that created Time Warner, the company's stock has languished. And the fate of Levin, who succeeded the late chairman Steve Ross in 1993, has often been in doubt. Under his watch, the company has been distinguished for its corporate coups, feuds and flavor-of-the-month approach to corporate strategy. The news of the FTC decision boosted the stock sharply. And, for now, Levin's future seems brighter. He "has the support of the board," Merv Adelson, a director, told NEWSWEEK.
And--perhaps equally important--that of Daly and Semel. Levin bolstered his support from them in a messy power struggle late last year by booting their rival (the chairman of HBO) and handing them control of the music group. Even his abrupt decision to buy Turner bears Daly's and Semel's fingerprints. …