A Deal Heard Round the World

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The merger raises the possibility of conflicts of interest among the various parts of the Time-Warner empire. Could, for example, a Time publication objectively review a Warner Bros. movie? Certainly, said TIME Editor in Chief Jason McManus, who pointed out that for years TIME and PEOPLE have been reviewing, both favorably and unfavorably, shows produced by the company's Home Box Office cable service. In forming their union, Time and Warner officials agreed that a commitment to journalistic and artistic integrity was absolutely essential. When asked what would happen when one of the Time magazines panned a Warner film, Ross replied, "They wouldn't hear from me at all. I'd just tell my people to make better movies."

To allow time for the two enterprises to get thoroughly comfortable with each other, Munro and Ross are planning to go slow in integrating the various divisions. Only the cable and books operations will be immediately combined. All others will continue to operate as separate units, with Warner's old divisions reporting to Ross and Time's to Munro and Nicholas. Five years down the road, according to the merger agreement, the management will be unified, with Nicholas as the chief executive. "We're not going to crash these two companies together," said Nicholas. Both Time and Warner believe their greatest opportunities for cooperation and growth lie overseas. Ross, for example, hopes to use Warner's worldwide film-and-TV-distribution network to market HBO programming.

Some industry observers have questioned whether Ross's Hollywood ways can easily coexist with the more conservative management style at Time. "Can they work together, or will egos get in the way of the dreams of managers?" asked a Wall Street media expert. Munro and Nicholas decided to go ahead only after many lengthy discussions with Ross dating back to early 1987, and they feel they know their man. "Over the past two years," said Munro, "we have probably spent more time with Steve Ross than with our wives. We feel very comfortable with him." As in all corporate marriages, the trick will be to keep the romance going after the courtship and honeymoon are over.

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CREDIT: TIME Diagram

CAPTION: Time Inc.