What the Time Warner Deal Means

The $7.5-billion deal joining Time Warner and Turner Broadcasting will create the world’s biggest media company, but critics say it could mean higher prices for consumers and hurt competition. A quick look at the impact of the proposed merger.

TO CONSUMERS

Consumer groups are still upset about the merger plans because Time Warner would end up controlling such over 40% of programming and distribution.

TO SHAREHOLDERS

The agreement announced Wednesday is almost certainly good news for Time Warner investors, who have been putting increasing pressure on Chairman Gerald Levin to wring profitability out of the company’s sprawling operations. Time Warner shares zoomed up $3.375 to $36.675 Wednesday with some analysts predicting the stock could fly as high as $70 to $80 a share in coming months.

The outlook is murkier for Tele-Communications, Inc., the cable giant that holds a major stake in Turner and whose power was curbed under the government agreement. But TCI expressed satisfaction with the deal.

TO RIVALS

The Federal Trade Commission, worried that the merger would give Time Warner control over 40% of all cable programming, has laid down a number of conditions to protect cable competitors.

The new media behemoth will be required to carry an all-news channel that will compete with Turner’s CNN, for instance, and will also be forbidden from charging higher prices to competing cable systems.