NEW YORK -- Time Warner Inc. -- moving to lighten its enormous debt load and improve its access to overseas markets -- agreed yesterday to sell a 12.5 percent stake in its historic Warner Bros. studio and its cable television operations, including HBO, to two Japanese companies for $1 billion.
The agreement with electronics-maker Toshiba Corp. and trading giant C. Itoh & Co. Ltd. is a big step toward fulfilling Time Warner Chairman Steven J. Ross' vision of a global, vertically integrated, entertainment industry powerhouse, analysts said.
"If you have partners who bring to the table different expertise, and those partners come from different countries, that's the best of all possible worlds," Mr. Ross said.
Time Warner's deal with the Japanese companies differs markedly from those made by Columbia Pictures and MCA, which sold themselves lock, stock and barrel within the last two years to electronics manufacturers Sony and Matsushita, respectively.
"They are investing $1 billion in this partnership, yet we have total control operationally and creatively," Mr. Ross emphasized. Time Warner will initially hold 87.5 percent of the partnership -- which excludes the company's book publishing, music and magazine businesses.
"This seems to be a smarter way of doing things," agreed one New York investment banker who specializes in the communications industry and asked to remain anonymous.
"Steve Ross managed to get top dollar for a minority stake."
Investors in Time Warner -- who have had little to cheer about since Time Inc. spurned a $200-a-share offer for the company from Paramount Communications in 1989 and bought Warner Communications instead -- also applauded the terms of the Japanese deal.
Time Warner's common stock jumped $3.25 to close at $89.50 a share in New York Stock Exchange trading.
Mr. Ross denied widespread entertainment industry and Wall Street speculation that the deal with Toshiba and C. Itoh was being driven primarily by Time Warner's need to lighten its $8.8 billion debt load. Time Warner also is weighted down by about $5 billion in preferred stock.
Nicholas J. Nicholas, president of Time Warner, said: "We wanted the right partners. If money were a principal objective, we would have done other deals earlier."