Federal antitrust agencies cleared a path Thursday for a $576.4-million bailout of Atlanta-based Turner Broadcasting System by a group of cable television companies. But the company said last-minute changes in the deal will hold up completion until next Wednesday.
Both the Federal Trade Commission and the Justice Department finished an expedited review of the transaction, under which cable operators are to get a 37% stake and a major voice in future financial decisions of Turner Broadcasting.
The company blamed the delay on "recent changes in agreements among certain of the investors." A Turner official later identified them as Time Inc. and Tele-Communications Inc. They are the two largest purchasers, and together they will hold more than two-thirds of the cable group's equity in Turner.
The company said all investors must approve the changes. Subject to this, Turner said, the investors have reconfirmed their commitments and consented to delay closing to June 3 but not later than June 10.
The company said it and the major investors (Time and Tele-Communications) "fully expect" that a sufficient number of consents will be obtained to permit the deal to close next Wednesday.
The company had hoped to close the deal by Monday, the deadline for it to redeem its Class A preferred stock or to begin paying out stock dividends to financier Kirk Kerkorian and other preferred stockholders.
William C. Bevins, Turner chief financial officer, said the company has decided "in the best interests" of both preferred and common stockholders not to declare the dividend pending the closing. At such time, Turner said, it intends to redeem the Class A stock together with unpaid dividends from March 25 to the redemption date.
Payment of the dividend in common stock before closing of the sale to the cable operators would have caused an indefinite delay in the closing, Bevins explained. The reason is that the resulting dilution in value of the company's stock would have required renegotiation with the cable operators.
If the deal is not closed by June 10, the company said, it intends to "immediately declare and pay" the June 1 scheduled dividend in common stock. Stock dividends would lower company founder Ted Turner's controlling interest in the company, at present 80%.
Times researcher Edith Stanley in Atlanta contributed to this story.