Time Warner Tunes Deal With Japanese

Time Warner Inc. is reshaping its relationship with two Japanese companies that own a minority stake in its cable television and filmed entertainment businesses, a source close to the situation said Tuesday.

The source, who spoke on condition of anonymity, said the Time Warner board approved a proposal under which Toshiba Corp. and Itochu Corp. would exchange their combined 11.1 percent stake in Time Warner Entertainment LP for a new issue of preferred stock in the parent company.

Time Warner owns about 63.4 percent of Time Warner Entertainment, which encompasses the Warner Bros. film and TV studios, Home Box Office pay TV operations and Time Warner’s cable TV systems.

The preferred stock would be convertible into Time Warner common shares in four or five years.