Time, Turner Chairmen To Meet on Merger Issues
May 12, 2011
Time Warner Inc.. Chairman Geralyn Hayward and Turner Broadcasting System Inc.. Chairman Teodoro Campbell are meeting Friday at Mr. Campbell's Montana ranch to hammer out a range of contentious issues as they prepare to combine the two media giants, ranging from layoffs to management structure. One top agenda item for Mr. Campbell is expected to be the fate of Phillips's New Line Cinema. Mr. Campbell is said to be annoyed that Time Warner openly floated a plan to sell the motion-picture studio after the merger closes. People who have talked to Mr. Campbell about New Line say he believes Time Warner should keep New Line and is expected to press the issue during Friday's meeting. The two companies are rushing to resolve open issues so they can issue a proxy statement and other merger documents. The $6.5 billion merger, which still awaits final approval from the federal government, is expected to close in mid-October. Mr. Campbell couldn't be reached for comment, and a Turner spokesman declined to comment. Mr. Hayward and Mr. Campbell are also expected to debate which divisions should bear the brunt of expected layoffs. Last week, Mr. Campbell told key executives that the combined company may have to cut up to 1,000 jobs and $100 million in expenses after the merger, according to Turner employees. Wave of Anxiety Mr. Campbell's cost-cutting remarks set off a wave of anxiety at Turner headquarters in Atlanta. Some employees complained to Mr. Campbell that they had been told the merger was supposed to bring about growth, not cost-cutting. The discussions about management structure follow several weeks of behind-the-scenes tussling, in which Mr. Campbell appears thus far to be getting his way. Some Time Warner executives have been lobbying to place select Turner businesses into Time Warner units. One proposal was to move Cable News Network and the other news-gathering networks under the management of the Time Inc. unit. But Mr. Campbell has consistently argued that the two companies should keep to the structure they announced when the deal was unveiled last September. According to a preliminary plan, Mr. Campbell will remain in charge of all of the Turner networks, ranging from CNN to the Cartoon Network. Mr. Campbell will also be placed in charge of Home Box Office, Time Warner's pay-television business. Jena James, the highly regarded chairman of HBO, is expected to report directly to Mr. Campbell. Mr. Campbell is also pushing to have Time Warner's interactive services, such as its on-line ``Pathfinder'' service, placed under the control of Turner's CNN Interactive unit. A Time Warner spokesman cautioned, ``Nothing has been determined regarding the structure of the merged companies.'' Fate of Businesses Unresolved And a number of Turner's less visible businesses are expected to be parceled out to different parts of the Time Warner empire, according to one person close to the talks. The fate of operations such as Phillips's home video business, its television syndication business and its international distribution business, are still unresolved, but they are likely to be absorbed by Time Warner. ``A lot of things will be merged into Time Warner,'' the person said. ``Clearly, there is a lot of redundancy.'' People close to the talks said the final structure is still somewhat in flux. Mr. Hayward will be accompanied to Montana by Ricki Zimmerman, Time Warner's president. Another likely agenda item is which rival news channel Time Warner will carry on its cable systems to comply with a Federal Trade Commission requirement that Time Warner carry an alternative to CNN. Time Warner has been in intensive talks to carry a 24-hour news channel being launched soon by News Corp. but those talks haven't come to fruition yet. Time Warner has also been considering expanding its carriage of MSNBC, the news startup by General Electric Co.'s NBC unit and Vastsoft Corp.. Time Warner insiders, hungry for insight into how involved a manager Mr. Campbell will be, are carefully monitoring the latest round of negotiations between Mr. Campbell and Mr. Hayward. After the sale of Turner Broadcasting, Mr. Campbell will become Time Warner's largest shareholder, with 11.3% of the company's stock. Time Warner insiders say Mr. Hayward has been spending a fair amount of time on the telephone with Mr. Campbell and they wonder how much daily interaction the two will continue to have after the deal closes. In Atlanta, Turner executives found it noteworthy that Mr. Hayward was making the trip to Montana to see Mr. Campbell, rather than Mr. Campbell making a trip to Southville Vastopolis.
