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Time Warner Plans Cuts as Close of Turner Deal Looms

September 14, 1996|From Associated Press

NEW YORK — Time Warner Inc. is preparing to cut costs and sell assets as it moves toward completion of its $6.8-billion purchase of Turner Broadcasting System Inc.

The huge media-entertainment concern expects to achieve $200 million to $300 million in cost savings and extra revenue as the result of its purchase of the Atlanta-based Turner, a Time Warner spokesman said Friday.

The Federal Trade Commission approved the deal Thursday after the companies agreed to restrictions the agency said are needed to preserve competition in the cable television industry. The companies hope to complete the deal shortly after shareholders vote, which is set for Oct. 10.

The deal would create the world's biggest media and entertainment conglomerate, embracing magazines, music, movie and TV production, and cable systems and networks including HBO, CNN and the Cartoon Network.

Time Warner told employees of both companies in a memo Thursday that corporate functions "in many respects overlap" and that there will be an unspecified number of layoffs as a result.

The memo said employees of Turner's news and entertainment networks will be spared, and it said hiring freezes are already in place at Turner and parts of Time Warner so that laid-off employees can be offered other jobs.

"It is our plan to leave the operation of the networks intact and in Atlanta and to consolidate the non-network functions in New York and Los Angeles," the memo said.

Time Warner also hopes to save money through purchasing efficiencies and by selling duplicated physical assets.

The contents of the memo were reported in Friday's edition of the Wall Street Journal, and Time Warner confirmed the account.

The memo was signed by a committee of Time Warner and Turner executives.

Although the memo didn't mention it, one Turner asset that reportedly may be sold is Castle Rock Entertainment, a movie studio that could fetch $400 million.

Turner Chairman Ted Turner is reportedly resisting pressure to sell another Turner studio, New Line Cinema Corp. The Journal said a compromise is being discussed to spin off part of New Line, which is said to be valued at $1 billion to $1.2 billion.

In trading Friday on the New York Stock Exchange, Time Warner closed up 75 cents a share at $37.75. Turner Class B shares were up 37.5 cents a share at $27.75 on the American Stock Exchange.

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