Time Warner, Turner Seek Compromise

Federal regulators and attorneys for Time Warner Inc. and Turner Broadcasting System Inc. are negotiating a plan that would allow the $7.5 billion merger to proceed - with strings attached.

There’s no decision yet on what those conditions will be, but negotiators hope to reach an accord soon to assuage regulators’ concerns that the deal would hurt competition.

Among the proposals is an agreement that the companies not discriminate against new competitors and abide by safeguards to protect competition, said one attorney, speaking on condition of anonymity. Such stipulations are common orders by regulators when clearing big mergers.

The companies and regulators have been meeting to work out an arrangement since Federal Trade Commission staff threatened to recommend blocking the deal in early May.

If a settlement is not reached, FTC staff could proceed with their recommendation - likely leading to litigation.

Regulators have been concerned that the deal would hurt competition by giving the merged company too much control over cable programming.

Time Warner owns HBO, the most popular pay-TV channel. Turner owns CNN, TBS, TNT and Headline News, all among the 15 most widely distributed cable networks.

The FTC also is concerned about provisions in the deal related to Denver-based Tele-Communications Inc., the nation’s largest cable company. The deal calls for TCI’s stake in Turner to be reduced from 21 percent now, to about 9 percent.