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Cable television broadcasting industry

Time Warner and Turner Broadcasting System Announce $7.5 Billion Merger

Strategic Insights

— 2 min read

Time Warner Chairman Gerald Levin and new partner Ted Turner, founder of Turner Broadcasting System Inc. (TBS), have agreed on a $7.5 billion merger that will create the world's largest media company. The deal, which has been weeks in the making, will see Time Warner acquire TBS for $7.5 billion, with most TBS shareholders receiving 0.75 shares of Time Warner stock. The merged company will have projected annual revenues of $19 billion, putting it in the same league with the combined Walt Disney Co.-Capital Cities/ABC if Disney completes its pending $19 billion buyout.

The merger will create a powerhouse media company with a diverse portfolio of brands, including Time, People and Sports Illustrated magazines, CNN, Warner Bros., TNT, and HBO. The combined company will also own some of the world's most popular cartoon libraries, including Warner Bros.' Looney Tunes and Hanna-Barbera Cartoons. Turner will become vice chairman of the merged company and run the TBS assets, including New Line Cinema and Castle Rock Entertainment, cable networks CNN, TNN, TBS, and the Cartoon Network, and the Atlanta Braves and Atlanta Hawks sports teams.

Key Takeaways:

  • The merger is valued at $7.5 billion, with most TBS shareholders receiving 0.75 shares of Time Warner stock.
  • The merged company will have projected annual revenues of $19 billion.
  • Turner will become vice chairman of the merged company and run the TBS assets.
  • The combined company will own a diverse portfolio of brands, including Time, People and Sports Illustrated magazines, CNN, Warner Bros., TNT, and HBO.
  • The merger will create a global media giant with a presence in film, television, and cable operations.
  • The deal has been weeks in the making, with initial resistance from Time Warner herself, and major obstacle of TCI, which owns 21 percent of TBS.
  • The deal includes the disclosure that TCI has signed agreements to carry Time Warner and TBS services on its cable systems at favorable prices.
  • The merger is expected to be completed next year.

Statistics:

  • The merger is valued at $7.5 billion.
  • Most TBS shareholders will receive 0.75 shares of Time Warner stock.
  • The merged company will have projected annual revenues of $19 billion.
  • Time Warner will keep its antitakeover "poison pill" trigger at 15 percent.
  • TCI, which owns 21 percent of TBS, is receiving a premium of 40 percent.
  • US West, which filed suit to block the transaction, owns a 9 percent stake in Time Warner.

Sources:

  • "Time Warner, Turner Agree on $7.5 Billion Merger" by Peter Ford, The Christian Science Monitor, September 22, 1996.
  • "Time Warner to Buy Turner Broadcasting System in $7.5 Billion Deal" by Don Kirk, The Wall Street Journal, September 22, 1996.
  • "Time Warner and Turner to Merge in $7.5 Billion Deal" by Steven Kastenbaum, Reuters, September 22, 1996.

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