TIME WARNER TO TARGET DEBT : JOB, ASSET CUTS ENVISIONED TO BOLSTER STOCKS.
Time Warner Inc., the world's No. 1 entertainment conglomerate, is gearing up to cut costs and sell assets in an effort to pare its sizable debt load.
Time Warner has told major shareholders that it plans to achieve $200 million to $300 million in cost savings and ``revenue enhancements'' as a result of its purchase of Turner Broadcasting System Inc.
Combined, the companies will have annual revenue of $21 billion and a blue-chip portfolio of assets that links Time magazines, Warner Bros. movies and music and cable television systems with cable programming brand names such as Cable News Network and The Cartoon Network.
But it will also have $17 billion in debt, a management structure with huge potential for conflict, and woefully undervalued stock.
Big investors are pressing now for Time Warner to restructure its partnership with U S West Inc., calling such a move the single-most important step Time Warner could take to boost its languishing stock price.
Investors are calling for Time Warner to shift control of its capital-intensive cable systems, along with billions of dollars in debt, to U S West in exchange for the return of control of Warner Bros. studio and Home Box Office. Time Warner and U S West declined to comment.
The brunt of the cost-cutting is expected to hit Turner Broadcasting's corporate staff. Turner Chairman Ted Turner has told his troops that the combined companies probably would cut as many as 1,000 jobs and $100 million in expenses. Turner has 8,000 workers; the combined company has 70,000.
A memo distributed to Time Warner and Turner employees Thursday stated, ``The corporate functions of TBS and Time Warner in many respects overlap. Therefore, there will be layoffs.''
The memo added that employees of Turner's news and entertainment networks wouldn't be affected.
While giving no target number, the memo said, ``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.''
Turner and ``selected'' areas of Time Warner have already imposed a hiring freeze so that vacant jobs can be offered to laid-off employees, according to the memo.
The memo, signed by a committee made up of three Time Warner executives and four Turner executives, said that cost savings would also be achieved through ``purchasing efficiencies'' and the sale of ``redundant physical assets.'' Turner's home video and syndication businesses are expected to be merged into Warner Bros.
The premerger jockeying between Time Warner Chairman Gerald Levin and Ted Turner, who will become a vice chairman of Time Warner and its single-largest shareholder, is being closely monitored by the large shareholders for clues as to how the two men will interact.
Although discussions have proceeded relatively smoothly, there has been some early friction, particularly in regard to Time Warner's eagerness to sell New Line Cinema, one of Ted Turner's prized assets, to raise cash and reduce debt.
Turner objected to the planned sale of New Line, and now he and Levin are hammering out a compromise regarding the movie studio. They are said to currently favor spinning off part of New Line.
Time Warner would keep a piece of the studio, but outside investors would provide the financing for the company's slate of movies. New Line is 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 62-1/2 cents a share at $27.87-1/2 on the American Stock Exchange.
Photo: (1) LEVIN
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|Publication:||Daily News (Los Angeles, CA)|
|Article Type:||Statistical Data Included|
|Date:||Sep 14, 1996|
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