As Time Warner Fights Debt, It Lives High On The Hog

July 15, 1991|By New York Times News Service

While executives of Time Warner Inc. huddled with bankers last week to discuss ways to reduce the company's $11 billion debt, the president of one of its subsidiaries flew from Los Angeles to a Sun Valley, Idaho, business meeting on one of the company's seven aircraft.

Time Warner has been so concerned about its debt level that it attempted a disputed rights offering that ultimately had to be scrapped. But despite a concession on its top executives' stock-option plan, disclosed in the new rights offering to be made today, the company has not demonstrated any willingness to trim back a corporate lifestyle that is lavish even by the glitzy standards of the entertainment business.

The company has not announced any plans to sell its airplanes, or the homes it maintains for corporate use in Aspen, Colo., and Acapulco, Mexico.

Time Warner's chairman and co-chief executive, Steven J. Ross -- who took home $78.3 million in salary, bonus and stock options last year, according to Forbes magazine -- uses a Time Warner helicopter on weekends to take his family to its home in East Hampton on Long Island, a person close to the company said. A company spokeswoman said it was inappropriate to comment.

Graef Crystal, a compensation expert who recently stopped working for Fortune, a Time Warner magazine, said: "In a highly leveraged mode, traditionally, the company cuts costs like mad. They don't pay bonuses. They sell the planes. They see themselves at war. In this case, they are not only flying the Concorde, they are chartering it -- when they ought to be on Greyhound."

Mr. Ross; N. J. Nicholas Jr., the company's president and co-chief executive; and Gerald M. Levin, the vice chairman, were apparently embarrassed by the attention given to the treatment of their options in the first rights offering and will forfeit some protection in the revised deal, in which the company will raise $2.8 billion by offering each shareholder six-tenths of a right to buy 34.5 million new shares of stock at $80 a share.

When the company announced its initial rights offering to raise $2.1 billion to $3.5 billion early last month, all options, including Mr. Ross' 1.8 million options with a strike price of $150, would have been adjusted to prices ranging from $124 to $144 to reflect the stock dilution.

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