Time Warner -- Turner Talks : POLICY : Officials Say Merger Would Raise Few Legal Eyebrows

WASHINGTON —  A Time Warner Inc. merger with Turner Broadcasting System Inc. would combine a number of businesses that now compete with one another and further concentrate U.S. media ownership, but antitrust experts and federal officials said Wednesday that such a marriage would probably pass legal muster.

“It is unlikely that the subcommittee would take a look at this deal,” said a spokesman for Sen. Strom Thurmond (R-S.C.), chairman of the Judiciary Subcommittee on Antitrust, Monopolies and Business Rights. “It’s not like they are trying to put a corner on the entertainment and communications market. . . . The senator would view this thing” as benign.

Charles F. Rule, a Washington lawyer who served as chief of the Justice Department’s antitrust division during the Ronald Reagan Administration, said the fact that Time Warner already owns a big piece of Turner diminishes the possibility of antitrust trouble.

“So far as I can tell--just looking at the major businesses of the two companies--it strikes me that there aren’t a lot of serious antitrust issues,” Rule said.

But the merger discussions between Time Warner and Turner have raised the ire of many public interest groups who believe the combination would have a deleterious effect on democratic discourse.

“All of these mergers that have been happening in the past few weeks have a real danger of putting too much power in too few hands,” said Anthony Wright, a coordinator for the Center for Media Education, a Washington media advocacy group. “This type of concentration is unhealthy for our democracy. We should be very vigilant in making sure that the marketplace of ideas remains in many hands.”

The possible deal has also rekindled concerns about whether federal antitrust laws--which are designed to address anti-competitive behavior--are adequate to deal with the issue of media concentration and its effects on the dissemination of ideas in the Information Age.

Because Turner and Time Warner are both major players in cable TV programming and TV and movie production, as well as news gathering and dissemination, a merger would appear to diminish competition in those areas--and deals that reduce competition have traditionally been vulnerable to antitrust challenge by either the Justice Department or the Federal Trade Commission.

In recent weeks, the Clinton Administration has spoken out against media concentration, with President Clinton threatening to veto a major telecommunications bill if Congress, among other things, relaxes current restrictions on the audience reach of television and radio station owners. (A House-Senate conference on the telecommunications bill is pending, and it is unclear what the final provisions on media ownership will be.)

But the Administration’s enthusiasm for aggressive antitrust enforcement appears to have dimmed in the wake of several embarrassing setbacks, and none of the recent media mergers have been subject to serious scrutiny.

Many policy-makers and antitrust experts say that with the explosion of media outlets in recent years--new wireless phones, a proliferation of cable channels and the emergence of Fox Television and newer networks--it is difficult to argue that media is becoming dangerously concentrated.

Yet even though antitrust experts think Time Warner and Turner will draw little scrutiny from the Justice Department or FTC, the Federal Communications Commission might pose a stickier problem.

The agency would have to rule whether the transfer of ownership of any broadcast licenses, such as Turner’s Atlanta television station, would be in the public interest, and must also determine if a Time Warner-Turner merger would violate its cable rules.

Bill Johnson, FCC deputy cable bureau chief, explained that a cable operator cannot own more than 40% of the programming transmitted over his cable system, and a single cable operator cannot furnish cable services to more than 30% of the nation’s households that are passed by cable.

If TCI, the nation’s largest cable operator, remained an investor in Turner after a merger, those rules could pose a major obstacle to Time Warner, which is the nation’s No. 2 cable operator. Turner, for its part, is a major cable programmer, as is Time Warner.

“This is one of those arrangements where there may be all kinds of issues to look at” because the deal would be so complex, Johnson said.