vast media conglomerate was created in 1989 when Warner Communication
and Time, Inc. merged. Through the 1990s it ranked as the largest
media company in the world, owning assets in excess of $20 billion,
and yearly generating revenues also measured in billions of dollars.
In late 1995, in the stormy climate of corporate media mergers begun
when the Disney Company bought Capital Cities/ABC, Time Warner set
out to create another huge merger with the purchase of the Turner
Broadcasting Company. Eclipsed in size by the Disney deal, the combination
with Turner would once again make Time Warner the largest media
conglomerate in the world.
Even before the latest mergers, however, Time Warner has functioned
as a major player in the television business. Its Warner Brothers'
studio produces a vast array of TV programs and distributes them
around the world. Its cable television division counts millions
of subscribers, and owns and operates leading networks such as HBO
and Cinemax. Each year Time Warner also sells millions of home video
recordings. Fully half its massive revenues come from television-related
subsidiaries. The rest flow from moviemaking, owing and operating
one of the top six major music labels, and publishing a string of
magazines including Time, Fortune, and Money.
Warner is everywhere in the television business of the 1990s. The
conglomerate owns 23% of the Turner Broadcasting Company and holds
three memberships on the board of that organization. Additional
representatives sit on the board of WTBS-the SuperStation, CNN,
and TNT, as well as the boards of Black Entertainment Television,
and the Comedy Channel. In 1995 it counted more than eleven million
cable subscribers to its own systems, and planned for more expansion.
In short, as the 20th century drew to a close, Time Warner could
count rival Tele-Communications, Inc. as its only true competitor
in the cable television industry and only the other five major Hollywood
studios as serious rivals in making television shows.
Warner of the company side entered television production first.
During the mid-1950s Warner Bros. served as the site for the creation
of such early hits as Cheyenne and 77 Sunset Strip.
Since then, in various configurations, the company has been involved
in the production, ownership and syndication of an imposing list
of television shows that includes Martin, Living Single, Jenny
Jones, Love Connection, Dukes of Hazard, Eight Is Enough, Knots
Landing, The Waltons, Wonder Woman, Alf, Family Matters, Full House,
Head of the Class, My Favorite Martian, Murphy Brown, and Perfect
Strangers. Dozens of made-for-TV movies also stream out of the
Warner studio each year. Time, Inc. came to cable TV in the 1960s
and became a leader on the strength of its innovation of HBO a decade
1989 merger linked these assets and pushed Time Warner toward becoming
the biggest television company in world history. The organization
truly hit its corporate stride when refashioned in the 1970s into
Warner Communication under Steven J. Ross.
created Time Warner, and as much as a single person can be responsible
for merging a multi-billion dollar world-wide media conglomerate,
the credit has to go to him. Ross sought to create an American company
that could stand up to Japanese conglomerates Sony and Matsushita,
then buying into Hollywood and taking over other media businesses
in the United States. The merger was advertised as a combination
of equals and at first Ross and J. Richard Monro of Time, Inc. were
listed as Co-Chief Operating Officers. But this "sharing of power"
proved short-lived; within a year Ross stood alone atop his media
Ross died in December of 1992, the actual day-to-day running of
Time Warner fell to his protege, Gerald M. Levin. Levin inherited
and thereafter expanded some of Ross' bold experiments. In September
1992, for example, Ross initiated New York 1 News, a 24-hour
local cable channel for one million subscribers living on Manhattan
Island. Ross knew such a proposition would be expensive, but New
York City was his home town and he planned for journalistic giant,
Time, Inc., to help make a 24-hour local cable TV news operation
profitable. New York 1 News represents an experiment on a
grand scale only Time Warner could attempt. Here the largest media
company in the world, in the largest media market in the United
States, under the close glare of Madison Avenue's advertising experts,
tries to make "the future" profitable now. With the close involvement
of The New York Times, New York 1 News represents one significant
case by which future "information superhighway" watchers will judge
the success (or failure) of the new age of mass communications.
telling experiment is Time Warner's Orlando, Florida trial, providing
full service, 500-channel cable television to 4000 homes. The offering
is complete with video games and movies on demand, multiple interactive
shopping channels, and information including news and reference
guides. All these options are available to individual homes as desired.
innovation and corporate synergy stand at the center of Time Warner's
future. Can the company truly bring the world of 500 channels to
the 100 million living rooms in the United States and then to billions
more around the world? Can Time Warner's book and magazine divisions
really generate new television shows and make long promised corporate
synergy profitable? And can Gerald Levin negotiate these future
forays while still paying off the billions of dollars of corporate
debt accumulated as part of the Time Warner merger? Most importantly,
can the company successfully implement still greater expansion?
The 1996 merger with Turner Broadcasting propels Time-Warner into
yet another level of corporate complexity, filled with potential
for even greater involvement in the construction of world-wide media
systems--and with potential financial disaster.
jury is still out. The future of Time Warner is unclear as the 20th
century ends. Gerald M. Levin, the hand picked successor, will need
all his skills to navigate the new promised land of 500 cable TV
channels. He has announced that Time Warner will offer telephone
service to businesses in New York City and has formed an alliance
with "Baby Bell" U.S. West to offer both cable and telephone service
in the Rocky Mountain states. Other possible investments in foreign
cable TV businesses and new television networks have also been mentioned.
Levin will be judged on whether these ventures turn profitable.
In the meantime we must judge Time Warner as a bold corporate experiment
in progress. Is it a venture successful only in building huge debt
or a farsighted sequence of mergers which resulted in a new type
of media conglomerate that redefined the television industry?
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Richard. "Time Warnter's Head Turner." Time (New York), 11
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Times, 10 October 1995.
John. "Hands Across the Cable: The Inside Story of How Media Titans
Overcame Competitors and Egos to Create a $20 Billion Giant."
Time (New York), 2 October 1995.
Mark. "Time Warner and Turner Seal Merger: After 5 Weeks, a $7.5
Billion Stock Deal." The New York Times, 23 September 1995.
Michael. "The Unlikely Mogul: Can Jerry Levin Keep a Grip on Time
Warner? Don't Count Him Out Yet." Business Week (New York),
11 December 1995.
Johnnie L. "An Urge to Merge: Foxes in the Chicken Coop." Newsweek
(New York), 11 September 1995.
"Time's Uneasy Pieces." Newsweek (New York), 2 October 1995.
States Congress, House Committee on the Judiciary, Subcommittee
on Economic and Commercial Law. Time-Warner Merger: Competitive
Implications. Hearing Before The Committee. Washington, D.C.:
United States Government Printing Office, 1989.
Gerald; Turner Broadcasting
Systems; Turner, Ted