Time Warner-Turner: It's a Deal

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NEW YORK CITY: Now comes the hard part. A little more than a year after the deal was announced, shareholders of Time Warner and Turner Broadcasting voted voted Thursday to approve the $7.5 billion merger. After clearing the considerable hurdles of an FTC review and the opposition of U.S. West, a large Time Warner shareholder, Time Warner chairman Gerald Levin and former Turner head Ted Turner have a daunting task ahead of them. More than 98% of the shareholders approved the merger and they now demand strong action to finally lift the value of the stock. Since Time and Warner merged in 1990, its share price has appreciated by just one-third, seriously lagging the rest of the market. In the last six years, Disney has seen its stock rise by 130%. General Electric's has advanced by 180%. And Microsoft, while not in the same line of work as Time Warner, has pleased investors with a 1,260% jump in value. Thus the pressure now builds on Levin and Turner to drive the moribund stock higher. But that's not all. The huge company faces a number of other problems, including the need to restructure the enormously complex cable system business, reducing or eliminating duplicating work in the post-merger world, and of course focusing once and for all on how the remove the albatross of $17.5 billion worth of debt. But perhaps the most immediate concern is whether Time Warner and Turner can successfully combine their disparate corporate cultures. TBS, through its flamboyant leader, has something of a risk-taking personality, while under the more introspective and cautious Levin, Time Warner has shown itself to be more conservative. At least for now, Wall Street is cautiously optimistic: Time Warner stock was up 50 cents a share to $41.621/2 in late-afternoon trading. Terence Nelan