<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Turner Broadcasting System, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Turner Broadcasting System, Inc.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/X/ Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
$125
(2) Form, Schedule or Registration Statement No.:
Schedule 14A
(3) Filing Party:
Turner Broadcasting System, Inc.
(4) Date Filed:
May 4, 1994
<PAGE> 2
TURNER BROADCASTING SYSTEM, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
JUNE 14, 1994
A Meeting of the Shareholders of Turner Broadcasting System, Inc. will be
held in the Brampton Rooms A and B of the Omni Hotel in Atlanta, Georgia, on
June 14, 1994, commencing at 9:00 a.m., local time.
At the meeting, the shareholders will be asked to consider and act upon a
proposal to amend the Company's Restated Articles of Incorporation, as amended,
to increase the voting power of the Company's Class A Common Stock from one vote
per share to two votes per share.
The Board of Directors has fixed the close of business on May 3, 1994 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the meeting. Please mark, sign and date the enclosed proxy form and
mail it promptly in the accompanying envelope.
By Order of the Board of Directors
STEVEN W. KORN
Secretary
Atlanta, Georgia
May 20, 1994
IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE MARK, SIGN
AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE WHICH HAS BEEN
PROVIDED. IN THE EVENT YOU ARE ABLE TO ATTEND THE MEETING, YOU MAY REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON.
<PAGE> 3
TURNER BROADCASTING SYSTEM, INC.
PROXY STATEMENT
FOR A SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 14, 1994
This proxy statement and the accompanying proxy card are furnished in
connection with the solicitation of proxies by the Board of Directors of Turner
Broadcasting System, Inc. (the "Company") for use at a Special Meeting of
Shareholders of the Company (the "Special Meeting") to be held on Tuesday, June
14, 1994, in the Brampton Rooms A and B of the Omni Hotel in Atlanta, Georgia,
at 9:00 a.m. local time, and any adjournments thereof. All shareholders are
encouraged to attend the Special Meeting. Your proxy is requested, however,
whether or not you attend in order to assure maximum participation and to
expedite the proceedings.
At the Special Meeting, shareholders will be requested to act upon a
proposal to amend Article 5 of the Company's Restated Articles of Incorporation,
as amended (hereinafter, the "Articles of Incorporation" or the "Articles").
Such proposal, if adopted, would increase the voting power of the Class A Common
Stock, par value $.0625 per share (the "Class A Common Stock"), of the Company
from one vote per share to two votes per share (the "Amendment"). As described
more fully herein, the Amendment, if adopted, will increase R.E. Turner's voting
power as of March 31, 1994 from approximately 52% to approximately 63%. The
Amendment is described in detail elsewhere in this proxy statement. If you are
not present at the meeting, your shares can be voted only when represented by
proxy. The shares represented by your proxy will be voted in accordance with
your instructions if the proxy is properly signed and returned to the Company
before the Special Meeting. You may revoke your proxy at any time prior to its
being voted at the Special Meeting by delivering a new duly executed proxy with
a later date or by delivering written notice of revocation to the Secretary of
the Company prior to the day of the Special Meeting, or by appearing and voting
in person at the Special Meeting. It is anticipated that this proxy statement
and accompanying proxy will first be mailed to the Company's shareholders on or
about May 23, 1994. The expenses incidental to the preparation and mailing of
this proxy material are being paid by the Company. No solicitation is planned
beyond the mailing of this proxy material to shareholders.
The principal executive offices of the Company are located at One CNN
Center, Atlanta, Georgia 30303.
VOTING SHARES
Only shareholders of record as of the close of business on May 3, 1994 will
be entitled to notice of and to vote at the Special Meeting. As of the close of
business on May 3, 1994, the Company had outstanding 68,330,388 shares of the
Class A Common Stock, 137,303,046 shares of its Class B Common Stock, par value
$.0625 per share (the "Class B Common Stock"), and 12,396,976 shares of its
Class C Convertible Preferred Stock, par value $.125 per share (the "Class C
Preferred Stock"). Holders of the Class A Common Stock, the Class B Common Stock
and the Class C Preferred Stock are entitled to vote on every matter submitted
to the shareholders, voting together as a single class except as to matters on
which separate class voting is required by law or by the Articles of
Incorporation. Each share of Class A Common Stock entitles the holder thereof to
one vote, each share of Class B Common Stock entitles the holder thereof to
one-fifth vote and each share of Class C Preferred Stock entitles the holder
thereof to vote as though they held the six shares of the Class B Common Stock
currently underlying each share of the Class C Preferred Stock (i.e., one and
one-fifth votes per share of Class C Preferred Stock).
The affirmative vote of the holders of a majority of the votes of the Class
A Common Stock, the Class B Common Stock and the Class C Preferred Stock, each
voting as a separate class, is required for approval of the Amendment proposed
herein. The abstention by any shareholder or the failure of any shareholder to
vote his shares on the Amendment will have the same effect as a vote AGAINST the
Amendment.
<PAGE> 4
As of March 31, 1994, Mr. R. E. Turner, Chairman of the Board and President
of the Company, was the record owner of 80.8% of the outstanding shares of Class
A Common Stock and 22.2% of the outstanding shares of Class B Common Stock. Mr.
Turner has informed the Company that he intends to vote all of his shares in
favor of the adoption of the Amendment. Accordingly, with respect to the vote of
the Class A Common Stock, no further votes in favor of the adoption of the
Amendments will be needed for approval of the Amendments by such class.
SECURITY OWNERSHIP OF MANAGEMENT
The following table contains certain information as of March 31, 1994
concerning shares of the Company's Class A Common Stock and Class B Common Stock
owned by (i) the current members of the Board of Directors of the Company and
former members of the Board of Directors who were serving as of such date, (ii)
the Chief Executive Officer and the four other most highly-compensated executive
officers of the Company, and (iii) all such directors and all executive officers
of the Company as a group. Under the rules of the Securities and Exchange
Commission (the "SEC"), generally a person is deemed to be a "beneficial owner"
of a security if he or she has or shares the power to vote or direct the voting
of such security, or the power to dispose or to direct the disposition of such
security. Thus, more than one person may be deemed a beneficial owner of the
same security. Because holders of the Class A Common Stock, holders of the Class
B Common Stock and holders of the Class C Preferred Stock generally vote
together on matters other than the election of directors and as otherwise
required by law, with each share of Class A Common Stock having one vote, each
share of Class B Common Stock having one-fifth vote and each share of Class C
Preferred Stock having one and one-fifth votes, the percentages of such combined
voting power held by the persons listed in the table below are reflected in a
separate column. Except as otherwise noted, the persons referred to below had
sole voting and investment power with respect to the shares set forth as
beneficially owned by them.
<TABLE>
<CAPTION>
% OF COMBINED
SHARES VOTING POWER
NAME OF TITLE OF BENEFICIALLY % OF % OF COMBINED IF AMENDMENT
BENEFICIAL OWNER SECURITIES OWNED CLASS VOTING POWER ADOPTED
- - --------------------------------- ----------- ----------- ----- ------------- -------------
<S> <C> <C> <C> <C> <C>
R. E. Turner..................... Class A 55,224,754(1) 80.8 49.9 61.7
Class B 30,529,968(1) 22.2 5.5 3.4
Henry L. Aaron................... NA NA NA NA NA
William C. Bartholomay(2)........ Class A 458,865 * * *
Class B 322,764 * * *
Peter R. Barton.................. Class A 600 * * *
Class B 300 * * *
Joseph J. Collins................ NA NA NA NA NA
Michael J. Fuchs................. NA NA NA NA NA
William H. Grumbles.............. Class B 38,336(3) * * *
W. Thomas Johnson................ Class B 102,133(4) * * *
Gerald M. Levin.................. NA NA NA NA NA
Rubye M. Lucas................... Class A 400 * * *
Class B 53 * * *
Bob Magness(5)................... NA NA NA NA NA
John C. Malone................... NA NA NA NA NA
Terence F. McGuirk............... Class B 150,800(6) * * *
Timothy P. Neher................. Class A 5,000 * * *
Class B 10,000 * * *
Brian L. Roberts................. NA NA NA NA NA
Scott M. Sassa................... Class B 23,396(7) * * *
Robert Shaye..................... Class B 4,572,579(8) 3.3 * *
Fred A. Vierra................... Class A 950 * * *
All directors and executive
officers as a group (25
persons)....................... Class A 55,690,815 81.5 50.3 62.2
Class B 35,874,890(9) 26.1 6.5 4.0
</TABLE>
- - ---------------
* Indicates beneficial ownership of less than 1.0%.
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<PAGE> 5
(1) Includes 559,962 shares owned by Turner Outdoor, Inc., an affiliated
corporation which is wholly-owned by Mr. Turner, and 3,000,000 shares of
Class B Common Stock as to which Mr. Turner has voting control but not
dispository control. Also includes 500,000 shares of Class B Common Stock
owned by Mr. Turner's wife, as to which shares Mr. Turner disclaims
beneficial ownership and 540,000 shares of Class B Common Stock held by the
Turner Foundation Inc., as to which shares Mr. Turner disclaims beneficial
ownership.
(2) Mr. Bartholomay served as a director of the Company during 1993 and until
April 15, 1994.
(3) Consists of shares which are subject to purchase upon exercise of options
and includes options with respect to 3,336 shares which are owned by Mr.
Grumble's wife, as to which shares Mr. Grumbles disclaims beneficial
ownership.
(4) Includes 88,333 shares which are subject to purchase upon exercise of
options.
(5) Mr. Magness served as a director of the Company during 1993 and until April
15, 1994.
(6) Includes 113,333 shares which are subject to purchase upon exercise of
options.
(7) Includes 6,667 shares which are subject to purchase upon exercise of
options.
(8) Includes (a) 107,349 shares owned by trusts for Mr. Shaye's family which are
subject to voting control by Mr. Shaye, (b) 214,698 shares held in trust by
Mr. Shaye for his children, (c) 176,544 shares owned by Mr. Shaye's spouse,
(d) 96,614 shares owned by Mr. Shaye's children, (e) 49,638 shares held by
a private foundation, (f) 31,295 shares held by the 401(k) defined
contribution plan of New Line Cinema Corporation in which Mr. Shaye has a
vested interest and (g) 1,658,088 shares of which are subject to purchase
upon exercise of options. Mr. Shaye disclaims beneficial ownership of those
shares which are held of record by his spouse, his children, by trusts for
the benefit of family members and the private foundation.
(9) Includes an aggregate of 2,024,392 shares which are subject to purchase upon
the exercise of options held by directors and executive officers of the
Company.
Except as discussed below under the caption "Security Ownership of Certain
Beneficial Owners," the Company knows of no person other than Mr. Turner who, as
of March 31, 1994, owns beneficially more than 5% of any class of the Company's
outstanding Common Stock. Mr. Turner's address is One CNN Center, Atlanta,
Georgia 30303.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table contains certain information as of March 31, 1994
concerning shares of the Company's Class C Preferred Stock and Class B Common
Stock beneficially owned by each person (other than the person set forth in the
preceding table under the caption "Security Ownership of Management") known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of either of these classes of securities, and reflects information presented in
each such person's Schedule 13D or Schedule 13G and amendments (if any) thereto
as filed with the SEC and provided to the Company. Because holders of the Class
C Preferred Stock generally vote together with the holders of the Common Stock
on matters other than election of directors and as otherwise required by law,
the percentages of the combined voting power represented by the persons listed
in the table below are reflected in a separate column. Because the Class C
Preferred Stock is convertible into Class B Common Stock at a present conversion
rate of six shares of Class B Common Stock for each share of Class C Preferred
Stock, the percentages of Class B Common Stock which would be held by the
persons listed below if their presently outstanding shares of Class C Preferred
Stock were
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<PAGE> 6
presently converted are reflected in a separate column. Except as otherwise
noted, the persons referred to below had sole voting and investment power with
respect to the shares set forth as beneficially owned by them.
<TABLE>
<CAPTION>
% OF
CLASS C CLASS B % OF COMBINED
PREFERRED STOCK COMMON STOCK CLASS B % OF VOTING
------------------ ------------------- COMMON COMBINED POWER IF
NAME AND ADDRESS BENEFICIAL % OF BENEFICIAL % OF UPON VOTING AMENDMENT
OF BENEFICIAL OWNER OWNERSHIP CLASS OWNERSHIP CLASS CONVERSION POWER ADOPTED
- - ------------------------------ --------- ----- ---------- ----- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Tele-Communications,
Inc.(1)..................... 5,889,551(2) 47.5 % 29,723,758(2) 21.7 % 30.7% 11.8% 7.3%
5619 DTC Parkway
Englewood, Colorado 80111
Time Warner Inc.(1)........... 4,890,457(3) 39.4 % 25,349,085(4) 18.5 % 25.8% 10.1%(5) 6.4%
Time & Life Bldg.
Rockefeller Center
New York, New York 10022
The Capital Group, Inc........ -- -- 12,979,320(6) 9.5 % NA 2.3% 1.5%
333 South Hope Street
Los Angeles, California
90071
</TABLE>
- - ---------------
(1) These entities are parties to certain agreements entered into in connection
with the offering by the Company in 1987 of units of securities comprised
of shares of the Class B Cumulative Preferred Stock and the Class C
Preferred Stock (the "Units Offering"), including (a) a Shareholders'
Agreement, which provides for certain voting and disposition arrangements
with respect to the parties' respective equity interests in the Company,
and (b) an Investors' Agreement, which provides for certain conversion and
disposition arrangements with respect to the Class C Preferred Stock held
by the investors in the Units Offering. By virtue of such agreements and
certain other agreements hereinafter referenced in this footnote, such
entities may be deemed, together with the other parties to such respective
agreements, to constitute "groups" (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended) for purposes of
determining beneficial ownership of the Class C Preferred Stock and the
Class B Common Stock. Except as set forth in the table above and as
otherwise acknowledged in these footnotes, each of the above entities
disclaims beneficial ownership of the shares owned by any other persons in
such "groups." These entities may also be deemed to constitute a group for
purposes of Section 13(d)(3) by virtue of an agreement entered into by
these and certain other parties in connection with the Units Offering,
which contains provisions relating to the acquisition, disposition and
voting of the Company's securities. In addition, by virtue of a Voting
Agreement entered into in connection with the Units Offering among
subsidiaries of these entities and certain other investors in the Units
Offering, such companies might constitute a group for the purposes of
Section 13(d)(3).
(2) Consists of shares (Class C Preferred Stock and Class B Common Stock,
respectively) held by entities in which Tele-Communications, Inc. claims
beneficial ownership, including United Artists Investments, Inc. (5,820,452
and 5,355,882), Communication Capital Corporation (none and 23,806,257),
Heritage Communications, Inc. (34,854 and 113,376), TCI Turner Preferred,
Inc. (34,245 and none), TCI TKR of Southern Kentucky, Inc. (none and
372,711), and WestMarc Development Joint Venture (none and 75,532).
(3) Consists of shares held by entities in which Time Warner Inc. ("TWI") claims
beneficial ownership, including Time TBS Holdings, Inc. (4,221,619) and
Warner Cable Communications, Inc. (668,838).
(4) Consists of shares held by entities in which TWI claims beneficial
ownership, including American Television and Communications Corporation
(15,678,147), Capital Cablevision Systems Inc. (291,532), Memphis CATV,
Inc. (902,606), Peoples Cable Corp. (138,604), SIFTA Milwaukee Cable Corp.
(34,172), TA Milwaukee Cable Co., Inc. (72,614), Time Warner Operations,
Inc. (4,881,687), WCCI (1,735,650), Warner Cable of NY Inc. (148,874) and
Warner Cable Operating Inc. (1,465,199).
(5) The percentage of combined voting power includes 254,100 shares of Class A
Common Stock held by Warner Communications Inc.
(6) The number of shares in the table is based upon a Schedule 13G, dated
February 23, 1994, filed by The Capital Group, Inc. Certain operating
subsidiaries of The Capital Group, Inc. exercised investment discretion
over various institutional accounts which held, as of December 31, 1993,
12,979,320 shares of
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<PAGE> 7
the Company's Class B Common Stock. Capital Guardian Trust Company, a bank,
and one of such operating companies, exercised investment discretion over
4,303,220 of said shares. Capital Research and Management Company and
Capital International, Inc., registered investment advisers, and Capital
International Limited and Capital International, S.A., other operating
subsidiaries, had investment discretion with respect to 7,572,880, 15,140,
1,059,080 and 29,000, respectively, of the above-referenced shares.
5
<PAGE> 8
PROPOSED AMENDMENT TO THE ARTICLES
OF INCORPORATION
The Board of Directors of the Company has proposed and declared advisable
and is recommending to the shareholders approval of an amendment to Article 5 of
the Company's Articles of Incorporation (the "Amendment") to increase the voting
power of the Class A Common Stock from one vote per share to two votes per
share.
The text of the section of Article 5 of the Articles of Incorporation as
proposed to be amended is set forth as Exhibit A to this proxy statement. The
Board of Directors urges each shareholder to carefully read and review the
description herein of the proposed Amendment and Exhibit A to this proxy
statement.
The Company presently has authorized 75,000,000 shares of Class A Common
Stock, 300,000,000 shares of Class B Common Stock, 500,000 shares of Class A
Serial Preferred Stock, par value $.10 per share (the "Class A Preferred
Stock"), 12,600,000 shares of Class B Cumulative Preferred Stock (the "Class B
Preferred Stock") (such class remains authorized but, as a result of the
redemption as of December 29, 1992 of all shares of such class outstanding,
cannot be reissued), 12,600,000 shares of Class C Preferred Stock, and
100,000,000 shares of Class D Serial Preferred Stock, par value $.0625 per share
(the "Class D Preferred Stock"), of which 68,330,388 shares of Class A Common
Stock, 137,303,046 shares of Class B Common Stock, and 12,396,976 shares of
Class C Preferred Stock were outstanding as of May 3, 1994. No shares of the
Class A Preferred Stock, the Class B Preferred Stock or the Class D Preferred
Stock are outstanding.
PURPOSE AND EFFECT OF THE PROPOSED AMENDMENT
Since 1987 the Company has had a dual class common stock structure
consisting of the Class A Common Stock and the Class B Common Stock, which
classes are identical in all respects except for voting power. With respect to
voting power, currently the Class A Common Stock entitles the holder thereof to
one (1) vote per share and the Class B Common Stock entitles the holder thereof
to one-fifth (1/5) vote per share. See "Voting Shares." If the proposed
Amendment is adopted, each share of Class A Common Stock will be entitled to two
(2) votes per share. The Amendment is proposed in order to permit Mr. Turner to
pursue charitable activities involving gifts of the Company stock owned by him
and to provide the Board of Directors with the ability to take advantage of
opportunities for the Company which merit or require the issuance of additional
capital stock of the Company without, in each case, triggering a change of
control of the Company through dilution of the voting interest of Mr. R. E.
Turner. As of April 30, 1994, Mr. Turner owned approximately 39.3% of the
Company's outstanding common equity and common equity equivalents (i.e., the
Class A Common Stock, the Class B Common Stock and the Class C Preferred Stock)
but, because of the disproportionately large number of shares of Class A Common
Stock owned by Mr. Turner, he was entitled as of such date to vote 55.4% of the
overall voting power of such common equity and common equity equivalents (see
Voting Shares -- Security Ownership of Management"). As is discussed in more
detail hereinafter, the present management and ownership structure of the
Company, as between Mr. Turner and the Units Investors (as defined below), as
well as a number of other contracts and licenses material to the Company, are
dependent upon Mr. Turner retaining at least 51% of the voting power of the
Company's securities (with such percentage being measured in various ways).
For the reasons described below, the Board of Directors believes that the
preservation of Mr. Turner's voting control of the Company's capital stock is in
the best interest of the Company and its shareholders. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE AMENDMENT.
In June 1987 the Company completed an offering of units of the Company's
securities (the "Units Offering") to a group of investors (together with certain
of their successors and transferees, the "Units Investors"), each unit
consisting of one share of the Company's Class B Preferred Stock and one share
of the Company's Class C Preferred Stock. In connection with the Units Offering,
Mr. R. E. Turner, the Units Investors and the Company entered into a
shareholders' agreement (as subsequently amended, the "Shareholders'
Agreement"). Under the Shareholders' Agreement, a proposed disposition by Mr.
Turner of shares of either Class A Common Stock or Class B Common Stock
(collectively the "Common Stock") (or certain securities convertible into Common
Stock ("Convertible Securities")) is subject to specified requirements
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<PAGE> 9
and restrictions if such disposition (a "Disposition") would result in either
(i) Mr. Turner's owning Common Stock representing less than 51% of the combined
voting power of the outstanding Common Stock and Class C Preferred Stock or (ii)
Mr. Turner's owning Common Stock, including shares underlying any Convertible
Securities he owns, representing less than 51% of the total voting power
represented by the sum of the Common Stock then outstanding, the Common Stock
underlying all Convertible Securities then outstanding, and the Common Stock
which could be issued (either directly or upon conversion of the Convertible
Securities) without the approval of the holders of the Class C Preferred Stock.
As of March 31, 1994, Mr. Turner owned Common Stock representing approximately
54% of the combined voting power of the Company for purposes of clause (i) of
the preceding paragraph and approximately 52% of the total voting power for
purposes of clause (ii). If the Amendment is adopted by the Company's
shareholders, Mr. Turner's current combined voting power, as measured under the
alternate tests of the Shareholders' Agreement will increase to approximately
64% and 63%, respectively. The Shareholders' Agreement provides that Mr. Turner
may make a Disposition only by first obtaining a bona fide offer from a third
party to purchase all of his Common Stock and his Convertible Securities
(collectively, the "Turner Shares"), then offering to sell the Turner Shares to
the Units Investors for an equivalent consideration and on terms no more
favorable to him than those offered by the third party, and thereafter selling
the Turner Shares as a whole to either the Units Investors or, if they reject
his offer, to the third party offeror. Other provisions of the Shareholders'
Agreement require the purchaser of the Turner Shares coincidentally to offer to
acquire all other outstanding Common Stock and Convertible Securities not then
owned by such purchaser. As a result of these provisions, any Disposition by Mr.
Turner will result in a sale of the Company either to the Units Investors or a
third party purchaser. The Board of Directors does not believe that either
result would currently be in the best interest of the Company and its
shareholders.
In addition, certain of the Company's licenses and agreements contain
change of control features placing additional requirements or burdens on the
Company. The Company's continued ownership of licenses, including a broadcast
license granted by the Federal Communications Commission for the Company's
operation of its television station and licenses granted by the National League
of Professional Baseball Clubs and the National Basketball Association for the
Company's operation of its two professional sports teams, could be jeopardized
if the Company were to effect a transaction which could result in a change of
control of the Company. Such a transaction resulting in a change in control (as
determined by the facts and circumstances for purposes of the television license
and as triggered by Mr. Turner's voting power dropping below 51% for purposes of
the sports franchises) would require the prior approval of the respective
licensing authorities. There can be no assurance that any such approval would be
obtained.
A change in control of the Company in which neither Mr. Turner, his estate,
heirs or legatees nor the holders of the Class C Preferred Stock beneficially
own at least a majority of the voting power of the Company's stock would
constitute a default under the Company's bank credit agreement. There is
currently approximately $875 million of indebtedness outstanding under the
Company's credit agreement. In addition, such a change of control could trigger
certain repurchase or repayment obligations as to certain of the Company's
outstanding public debt. There is currently approximately $770 million of debt
securities outstanding with such repurchase or repayment obligations. Further,
certain of the Company's other public debt instruments provide that both such a
change of control as well as a downgrading in the rating of the relevant debt
must also occur within a specified period in order for the change of control to
give rise to repurchase obligations. There is currently approximately $747
million of debt securities outstanding with repurchase or repayment obligations
that require both a change of control and such a downgrade. Given the agreements
currently in place between Mr. Turner and the holders of the Class C Preferred
Stock, such change in control could occur only if a third party offeror, rather
than the Units Investors, purchased the Turner Shares in accordance with the
Shareholders' Agreement described above.
Mr. Turner has, in the past, been involved in several charitable and
nonprofit organizations, and currently intends to continue his involvement in
and increase his gifts of stock to such organizations. Under the present
circumstances, however, such transfers by Mr. Turner could reduce Mr. Turner's
voting power to such an extent that a change of control results or the
provisions of the Shareholders' Agreement are activated. Adoption of the
proposed Amendment would help ensure that Mr. Turner's private philanthropic
activities do
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<PAGE> 10
not have an adverse effect on the Company and its shareholders. Mr. Turner's
interest in the proposed Amendment is in part as a result of his desire to
pursue such activities. Since April 1, 1991, Mr. Turner has donated
approximately 3 million shares of Class B Common Stock to various charitable
organizations. As of March 31, 1994, Mr. Turner could transfer shares
representing a total of approximately 972,000 votes, composed of combinations of
Class B Common Stock and Class A Common Stock, without causing his voting power
to fall below 51%. (The above calculations assume (i) the conversion, in
connection with the acquisition of New Line Cinema Corporation ("New Line"), of
the maximum possible number of outstanding shares of common stock of New Line,
including warrants, options and New Line's 6 1/2% convertible subordinated
debentures, into shares of Class B Common Stock, (ii) the exercise of all
options issuable under the Company's Stock Option Plan and the Company's 1993
Stock Option and Equity-Based Award Plan and (iii) the issuance of shares of
Class B Common Stock upon conversion of the Company's outstanding Liquid Yield
Option Notes due 2007.) In addition, by permitting Mr. Turner to maintain his
current significant voting interest even if he chooses to dispose of a
significant amount of his shares, the proposed Amendment would reduce the risk
of a change in control that might not be in the best interests of the Company
and its shareholders and the related risk of disruption in the continuity of the
Company's current management and its long-term plans and objectives. The Board
in its deliberations did not consider other alternatives to preserve the voting
power of Mr. Turner, including asking Mr. Turner to purchase additional shares
of the Company's common stock or, with respect to donations to charitable
organizations by Mr. Turner, asking the Unit Investors and other parties to
material contracts and licenses to waive covenants and rules that restrict a
reduction of Mr. Turner's voting power below certain levels.
As previously noted, the Amendment will result in an increase of the
proportionate voting interest of a holder of Class A Common Stock in the
Company, including Mr. Turner. Correspondingly, the Amendment will result in a
decrease of the proportionate voting interest of a holder of Class B Common
Stock and, accordingly, a holder of Class C Preferred Stock. The proposed
Amendment will not otherwise change the rights of holders of the Class A Common
Stock or the Class B Common Stock.
The Board believes that the current level of Mr. Turner's voting power
greatly restricts Mr. Turner's charitable activities and the Company's ability
to take advantage of opportunities and to meet situations requiring the issuance
of equity capital which would be beneficial to the Company and its shareholders.
In light of such belief, as well as the matters noted above, the Board of
Directors believes that the increase in the voting power of the Class A Common
Stock is in the best interest of the Company. Accordingly, the Board has
unanimously approved the Amendment and recommends the shareholders vote FOR the
adoption of the Amendment.
POSSIBLE CHANGE IN VOTING RIGHTS POLICY
Recently SEC Chairman Arthur Levitt proposed that the national securities
exchanges, including the American Stock Exchange (the "AMEX"), adopt a uniform
voting rights policy which would prohibit companies with publicly traded common
stock from disparately reducing or restricting the voting rights of such shares.
The first such effort by the SEC, Rule 19c-4, was overturned by a court in 1990.
The AMEX's existing voting rights policy permits listed companies to maintain a
dual class capital structure, such as the one the Company has had in place since
1987. Chairman Levitt's proposal has not yet become the rule at any securities
exchange, although the AMEX has indicated its intention to adopt such proposal.
The AMEX, after reviewing the terms of the proposed Amendment, has advised
the Company that the proposal to change the voting power of the Class A Common
Stock would not violate the current AMEX rules governing common stocks with
different voting rights and that the Company is free to seek shareholder
approval of the Amendment. If, subsequent to the adoption of the proposed
Amendment, the AMEX were to elect to adopt the Levitt proposal, such voting
rights policy would not require the Company to change the capital structure
implemented by the Amendment.
8
<PAGE> 11
VOTE REQUIRED FOR APPROVAL
Approval of the proposed Amendment requires the affirmative vote of the
holders of a majority of the outstanding shares of each of the Class A Common
Stock, the Class B Common Stock and the Class C Preferred Stock, voting as
separate voting groups. As of March 31, 1994, the directors and executive
officers of the Company together beneficially owned an aggregate of
approximately 81.5% of the outstanding shares of the Class A Common Stock and
26.1% of the outstanding shares of Class B Common Stock, including approximately
80.8% and 22.2%, respectively, beneficially owned by Mr. Turner. The Units
Investors together beneficially own all the outstanding shares of the Class C
Preferred Stock. See "Voting Shares -- Security Ownership of Management,
-- Security Ownership of Certain Beneficial Owners".
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
action at the Special Meeting other than the Amendment as described in the
immediately preceding section of this proxy statement. If any other business
should properly come before the meeting, the persons named in the accompanying
form of proxy intend to vote thereon in accordance with their best judgment.
SHAREHOLDERS' PROPOSALS
Any shareholder of the Company who wished to present a proposal at the 1994
annual meeting of shareholders of the Company should have previously delivered a
copy of such proposal to the Company. Any shareholder of the Company who wishes
to present a proposal at the 1995 annual meeting of shareholders of the Company,
and who wishes to have such proposal included in the Company's proxy statement
for that meeting, must deliver a copy of such proposal to the Company at One CNN
Center, Atlanta, Georgia 30303, Attention: Corporate Secretary, no later than
January 31, 1995; however, if the 1995 annual meeting of shareholders is held on
a date more than 30 days before or after the corresponding date of the 1994
Annual Meeting, any shareholder who wishes to have a proposal included in the
Company's proxy statement for that meeting must deliver a copy of the proposal
to the Company a reasonable time before the proxy solicitation is made. The
Company reserves the right to decline to include in the Company's proxy
statement any shareholder's proposal which does not comply with the rules of the
SEC for inclusion therein.
You are encouraged to let us know your preference by marking the
appropriate boxes on the enclosed proxy.
9
<PAGE> 12
EXHIBIT A
TURNER BROADCASTING SYSTEM, INC.
PROPOSED AMENDMENT OF ARTICLE 5
OF THE RESTATED ARTICLES OF INCORPORATION, AS AMENDED
DELETIONS ARE INDICATED BY A LINE THROUGH EXISTING TEXT.
UNDERLINING INDICATES MATERIAL TO BE ADDED.
SECTION E OF ARTICLE 5 SHALL BE AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:
SECTION E
THE CLASS A COMMON STOCK AND THE
CLASS B COMMON STOCK
The Class A Common Stock shall consist of 75,000,000 shares, par value
$.0625 per share (the "Class A Common Stock"), and the Class B Common Stock
shall consist of 300,000,000 shares, par value $0.625 per share (the "Class B
Common Stock"). Except as otherwise provided in this Section E, each share of
Class A Common Stock and each share of Class B Common Stock (collectively, the
"Common Stock") shall be identical in all respects and shall have equal rights
and privileges.
1. Dividends. Subject to the rights of holders of stock of the Corporation
senior to the Common Stock with respect to the declaration and payment of
dividends, holders of Class A Common Stock and holders of Class B Common Stock
shall be entitled to receive such dividends and other distributions in cash,
stock or property of the Corporation as may be declared thereon by the Board of
Directors from time to time out of assets or funds of the Corporation legally
available therefor. Each share of Class A Common Stock and each share of Class B
Common Stock shall have the same rights as to dividends and distributions of the
Corporation; provided, that in the case of dividends or other distributions
payable in Common Stock of the Corporation, the declaration and payment thereof
shall be made as follows:
If a dividend is to be declared and paid in either Class A Common
Stock or Class B Common Stock (but not both), such dividend shall be
declared and paid equally on a per share basis to all holders of Common
Stock without regard to the class held; but if a dividend is to be declared
and paid in both Class A Common Stock and Class B Common Stock, it may
either be declared and paid equally on a per share basis to all holders of
Common Stock without regard to the class held or it may be declared and
paid such that holders of Class A Common Stock are paid only Class A Common
Stock and holders of Class B Common Stock are paid only Class B Common
Stock, provided that each holder of either class of Common Stock, as such,
is paid the same number of shares on a per share basis as each holder of
the other class of Common Stock is paid as such holder.
In the case of any subdivision or combination of either class of Common Stock, a
proportionate subdivision or combination of the other class of Common Stock
shall be made.
2. Voting. At every meeting of the shareholders of the Corporation, every
holder of Class A Common Stock shall be entitled to [one (1) vote] two (2) votes
-------------- _____________
in person or by proxy for each share of Class A Common Stock standing in his
name on the transfer books of the Corporation, and every holder of Class B
Common Stock shall be entitled to one-fifth (1/5) vote in person or by proxy
for each share of Class B Common Stock standing in his name on the transfer
books of the Corporation.
Holders of Class A Common Stock and Class B Common Stock shall vote
together as a single class on every matter submitted to a vote of the
shareholders of the Corporation except as to those matters on which separate
class voting is required by applicable law or by these Articles of
Incorporation.
A-1
<PAGE> 13
TURNER BROADCASTING SYSTEM, INC.
ONE CNN CENTER, ATLANTA, GEORGIA 30303
CLASS A COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF SHAREHOLDERS, JUNE 14, 1994
The undersigned hereby appoints CHRISTIAN L. BECKEN, STEVEN W. KORN, and
WAYNE H. PACE, and each of them, proxies with full power of substitution, to
represent and to vote as set forth herein all the shares of Class A Common Stock
of Turner Broadcasting System, Inc. held of record by the undersigned on May 3,
1994, at the Special Meeting of Shareholders to be held in the Brampton Rooms A
and B of the Omni Hotel in Atlanta, Georgia, at 9:00 a.m., local time, on
Tuesday, June 14, 1994, and any adjournments thereof.
1. Proposal to amend the Company's Restated Articles of Incorporation, as
amended, to increase the voting power of the Company's Class A Common Stock
from one vote per share to two votes per share.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the proxies are authorized to vote as described in the
proxy statement and upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEM 1.
<TABLE>
<S> <C>
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
If stock is held in the name of two or more
persons, all must sign. When signing as
attorney, executor, administrator, trustee,
or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated:
----------------------------------
----------------------------------------
Signature
----------------------------------------
Signature If Held Jointly
</TABLE>
<PAGE> 14
TURNER BROADCASTING SYSTEM, INC.
ONE CNN CENTER, ATLANTA, GEORGIA 30303
CLASS B COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF SHAREHOLDERS, JUNE 14, 1994
The undersigned hereby appoints CHRISTIAN L. BECKEN, STEVEN W. KORN, and
WAYNE H. PACE, and each of them, proxies with full power of substitution, to
represent and to vote as set forth herein all the shares of Class B Common Stock
of Turner Broadcasting System, Inc. held of record by the undersigned on May 3,
1994, at the Special Meeting of Shareholders to be held in the Brampton Rooms A
and B of the Omni Hotel in Atlanta, Georgia, at 9:00 a.m., local time, on
Tuesday, June 14, 1994, and any adjournments thereof.
1. Proposal to amend the Company's Restated Articles of Incorporation, as
amended, to increase the voting power of the Company's Class A Common Stock
from one vote per share to two votes per share.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the proxies are authorized to vote as described in the
proxy statement and upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEM 1.
<TABLE>
<S> <C>
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
If stock is held in the name of two or more
persons, all must sign. When signing as
attorney, executor, administrator, trustee,
or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated:
--------------------------------------
---------------------------------------------
Signature
---------------------------------------------
Signature If Held Jointly
</TABLE>
<PAGE> 15
TURNER BROADCASTING SYSTEM, INC.
ONE CNN CENTER, ATLANTA, GEORGIA 30303
CLASS C CONVERTIBLE PREFERRED STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR SPECIAL MEETING OF SHAREHOLDERS, JUNE 14, 1994
The undersigned hereby appoints CHRISTIAN L. BECKEN, STEVEN W. KORN, and
WAYNE H. PACE, and each of them, proxies with full power of substitution, to
represent and to vote as set forth herein all the shares of Class C Convertible
Preferred Stock of Turner Broadcasting System, Inc. held of record by the
undersigned on May 3, 1994, at the Special Meeting of Shareholders to be held in
the Brampton Rooms A and B of the Omni Hotel in Atlanta, Georgia, at 9:00 a.m.,
local time, on Tuesday, June 14, 1994, and any adjournments thereof.
1. Proposal to amend the Company's Restated Articles of Incorporation, as
amended, to increase the voting power of the Company's Class A Common Stock
from one vote per share to two votes per share.
/ / FOR / / AGAINST / / ABSTAIN
2. In their discretion, the proxies are authorized to vote as described in the
proxy statement and upon such other business as may properly come before the
meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR"
ITEM 1.
<TABLE>
<S> <C>
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE. PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
If stock is held in the name of two or more
persons, all must sign. When signing as
attorney, executor, administrator, trustee,
or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Dated:
-------------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature If Held Jointly
</TABLE>
