9610004
                                                                 B213455


                              UNITED STATES OF AMERICA
                          BEFORE FEDERAL TRADE COMMISSION


COMMISSIONERS:            Robert Pitofsky, Chairman
                          Mary L. Azcuenaga
                          Janet D. Steiger
                          Roscoe B. Starek, III
                          Christine A. Varney

____________________________________)
 In the Matter of                     ))
TIME WARNER INC.,                   )
      a corporation;                  ))
TURNER BROADCASTING                   )
SYSTEM, INC.,                         )
      a corporation;                  ))                    Docket No. C-3709
TELE-COMMUNICATIONS, INC.,            )
      a corporation; and              )                     DECISION AND ORDER
                                      )
LIBERTY MEDIA CORPORATION,            )
      a corporation.                  )
____________________________________)

      The Federal Trade Commission ("Commission"), having initiated an
investigation of the proposed acquisition of Turner Broadcasting System, Inc.
( Turner ) by Time Warner Inc. ( Time Warner ), and Tele-Communications, Inc. s
( TCI ) and Liberty Media Corporation s ( LMC ) proposed acquisitions of
interests in Time Warner, and it now appearing that Time Warner, Turner, TCI,
and LMC (collectively,  Respondents ) having been furnished with a copy of a
draft complaint that the Bureau of Competition proposed to present to the
Commission for its consideration, and which, if issued by the Commission,
would charge respondents with violations of Section 5 of the Federal Trade
Commission Act, as amended, 15 U.S.C.   45, and Section 7 of the Clayton Act,
as amended, 15 U.S.C.   18; and

      Respondents, their attorneys, and counsel for the Commission having
thereafter executed an agreement containing a consent order, an admission by
respondents of all the jurisdictional facts set forth in the aforesaid draft
of complaint, a statement that the signing of said agreement is for settlement
purposes only and does not constitute an admission by respondents that the law
has been violated as alleged in such complaint, and waivers and other
provisions as required by the Commission's Rules; and

      The Commission having thereafter considered the matter and having

                              UNITED STATES OF AMERICA
                          BEFORE FEDERAL TRADE COMMISSION

___________________________________ )
 In the Matter of                           ) )
TIME WARNER INC.,                           )
       a corporation;                       ))
TURNER BROADCASTING                         )
SYSTEM, INC.,                               )
       a corporation;                       ))                     File No.  961-0004
TELE-COMMUNICATIONS, INC.,                  )
       a corporation; and                   ))
LIBERTY MEDIA CORPORATION,                  )
       a corporation.                       )
___________________________________   )



                     AGREEMENT CONTAINING CONSENT ORDER



       The Federal Trade Commission ("Commission"), having initiated an investigation of
the proposed acquisition of Turner Broadcasting System, Inc. ("Turner") by Time Warner Inc.
("Time Warner"), and Tele-Communications, Inc.'s ("TCI") and Liberty Media Corporation's
("LMC") proposed acquisitions of interests in Time Warner, and it now appearing that Time
Warner, Turner, TCI, and LMC, hereinafter sometimes referred to as "proposed
respondents," are willing to enter into an agreement containing an order to divest certain
assets, and providing for other relief:

       IT IS HEREBY AGREED by and between proposed respondents, by their duly
authorized officers and attorneys, and counsel for the Commission that:

1.     Proposed respondent Time Warner is a corporation organized, existing and doing
       business under and by virtue of the laws of the State of Delaware with its office and
       principal place of business located at 75 Rockefeller Plaza, New York, New York
       10019.

2.     Proposed respondent Turner is a corporation organized, existing and doing business
       under and by virtue of the laws of the State of Georgia, with its office and principal



       place of business located at One CNN Center, Atlanta, Georgia  30303.

3.     Proposed respondent TCI is a corporation organized, existing and doing business under
       and by virtue of the law of the State of Delaware, with its office and principal place of
       business located at 5619 DTC Parkway, Englewood, Colorado 80111.

                              UNITED STATES OF AMERICA
                          BEFORE FEDERAL TRADE COMMISSION

___________________________________ )
 In the Matter of                           ) )
TIME WARNER INC.,                           )
       a corporation;                       ))
TURNER BROADCASTING                         )
SYSTEM, INC.,                               )
       a corporation;                       ))                       File No.  961-0004
TELE-COMMUNICATIONS, INC.,                  )
       a corporation; and                   ))
LIBERTY MEDIA CORPORATION,                  )
       a corporation.                       )
___________________________________   )



                     AGREEMENT CONTAINING CONSENT ORDER



       The Federal Trade Commission ("Commission"), having initiated an investigation of
the proposed acquisition of Turner Broadcasting System, Inc. ("Turner") by Time Warner Inc.
("Time Warner"), and Tele-Communications, Inc.'s ("TCI") and Liberty Media Corporation's
("LMC") proposed acquisitions of interests in Time Warner, and it now appearing that Time
Warner, Turner, TCI, and LMC, hereinafter sometimes referred to as "proposed
respondents," are willing to enter into an agreement containing an order to divest certain
assets, and providing for other relief:

       IT IS HEREBY AGREED by and between proposed respondents, by their duly
authorized officers and attorneys, and counsel for the Commission that:

1.     Proposed respondent Time Warner is a corporation organized, existing and doing
       business under and by virtue of the laws of the State of Delaware with its office and
       principal place of business located at 75 Rockefeller Plaza, New York, New York
       10019.


                                                   1



2.     Proposed respondent Turner is a corporation organized, existing and doing business
       under and by virtue of the laws of the State of Georgia, with its office and principal
       place of business located at One CNN Center, Atlanta, Georgia  30303.

3.     Proposed respondent TCI is a corporation organized, existing and doing business under
       and by virtue of the law of the State of Delaware, with its office and principal place of

                                                                                      9610004
                                                                                      B213455


                               UNITED STATES OF AMERICA
                           BEFORE FEDERAL TRADE COMMISSION

____________________________________)
     In the Matter of                         ))
TIME WARNER INC.,                             )
        a corporation;                 )
                                              )
TURNER BROADCASTING                           )
SYSTEM, INC.,                                 )       Docket No. C-3709
        a corporation;                 )
                                              )
TELE-COMMUNICATIONS, INC.,                    )
        a corporation; and                    ))
LIBERTY MEDIA CORPORATION,                    )
        a corporation.                 )
____________________________________)


                                            COMPLAINT

        Pursuant to the provisions of the Federal Trade Commission Act and the Clayton Act, and
by virtue of the authority vested in it by said Acts, the Federal Trade Commission
("Commission"), having reason to believe that respondents Time Warner Inc., Turner
Broadcasting System, Inc., Tele-Communications, Inc., and Liberty Media Corporation, all
subject to the jurisdiction of the Commission, have entered into various agreements in violation of
Section 5 of the Federal Trade Commission Act, as amended, 15 U.S.C.   45, and that if the
terms of such agreements were to be consummated, would result in a violation of Section 7 of the
Clayton Act, as amended, 15 U.S.C.   18, and Section 5 of the Federal Trade Commission Act, as
amended, 15 U.S.C.   45, and it appearing to the Commission that a proceeding in respect thereof
would be in the public interest, hereby issues its complaint, stating its charges as follows:



                                             I.  Definitions

1.        For the purposes of this complaint, the following definitions shall apply:



          a.     "Cable Television Programming Service" means satellite-delivered video
programming that is offered, alone or with other services, to Multichannel Video Programming
Distributors ("MVPDs") in the United States.

          b.     "Fully Diluted Equity of Time Warner" means all Time Warner common stock

           DISSENTING STATEMENT OF COMMISSIONER MARY L. AZCUENAGA

                     in Time Warner Inc., Docket C-3709

   The Commission today issues a consent order to settle allegations that
   the acquisition by Time Warner Inc. (Time Warner) of Turner
   Broadcasting System, Inc. (Turner), and related agreements with
   Tele-Communications, Inc. (TCI), would be unlawful. Alleging that this
   transaction violates the law is possible only by abandoning the rigor
   of the Commission's usual analysis under Section 7 of the Clayton Act.
   To reach this result, the majority adopts a highly questionable market
   definition, ignores any consideration of efficiencies and blindly
   assumes difficulty of entry in the antitrust sense in the face of
   overwhelming evidence to the contrary. The decision of the majority
   also departs from more general principles of antitrust law by favoring
   competitors over competition and contrived theory over facts.

   The usual analysis of competitive effects under the law, unlike the
   apparent analysis of the majority, would take full account of the
   swirling forces of innovation and technological advances in this
   dynamic industry. Unfortunately, the complaint and the underlying
   theories on which the order is based do not begin to satisfy the
   rigorous standard for merger analysis that this agency has applied for
   years. Instead, the majority employs a looser standard for liability
   and a regulatory order that threatens the likely efficiencies from the
   transaction. Having found no reason to relax our standards of analysis
   for this case, I cannot agree that the order is warranted.

                               Product Market

   We focus in merger analysis on the likelihood that the transaction
   will create or enhance the ability to exercise market power, i.e.,
   raise prices. The first step usually is to examine whether the merging
   firms sell products that are substitutes for one another to see if
   there is a horizontal competitive overlap. This is important in a case
   based on a theory of unilateral anticompetitive effects, as this one
   is, because the theory requires a showing that the products of the
   merging firms are the first and second choices for consumers.

   In this case, it could be argued from the perspective of cable system
   operators and other multichannel video program distributors (MVPDs),
   who are purchasers of programming services, that all video programming
   networks are substitutes. This is the horizontal competitive overlap
   that is alleged in the complaint.

   One problem with the alleged all-programming market is that basic
   cable programming services (such as Turner's CNN) and premium cable
   programming services (such as Time Warner's HBO) are not substitutes

                                           Appendix I

                              UNITED STATES OF AMERICA
                          BEFORE FEDERAL TRADE COMMISSION
____________________________________))
 In the Matter of                            ) )
TIME WARNER INC.,                            )
       a corporation;                        ))
TURNER BROADCASTING                          )
SYSTEM, INC.,                                )
       a corporation;                        ))                    File No.  961-0004
TELE-COMMUNICATIONS, INC.,                   )
       a corporation; and                    ))
LIBERTY MEDIA CORPORATION,                   )
       a corporation.                        ))
____________________________________)




                                  INTERIM AGREEMENT


       This Interim Agreement is by and between Time Warner Inc. ("Time Warner"), a
corporation organized, existing, and doing business under and by virtue of the law of the State
of Delaware, with its office and principal place of business at New York, New York; Turner
Broadcasting System, Inc. ("Turner"), a corporation organized, existing, and doing business
under and by virtue of the law of the State of Georgia with its office and principal place of
business at Atlanta, Georgia; Tele-Communications, Inc. ("TCI"), a corporation organized,
existing, and doing business under and by virtue of the law of the State of Delaware, with its
office and principal place of business located at Englewood, Colorado; Liberty Media Corp.
("LMC"), a corporation organized, existing and doing business under and by virtue of the law
of the State of Delaware, with its office and principal place of business located at Englewood,
Colorado; and the Federal Trade Commission ("Commission"), an independent agency of the
United States Government, established under the Federal Trade Commission Act of 1914, 15
U.S.C. § 41 et seq.



       WHEREAS Time Warner entered into an agreement with Turner for Time Warner to
acquire the outstanding voting securities of Turner, and TCI and LMC proposed to acquire
stock in Time Warner (hereinafter "the Acquisition");

       WHEREAS the Commission is investigating the Acquisition to determine whether it
would violate any statute enforced by the Commission;

       WHEREAS TCI and LMC are willing to enter into an Agreement Containing Consent
Order (hereafter "Consent Order") requiring them, inter alia, to divest TCI's and LMC's
Interest in Time Warner and TCI's and LMC's Turner-Related Businesses," by contributing

                                ANALYSIS OF PROPOSED
                       CONSENT ORDER TO AID PUBLIC COMMENT

I.     Introduction

       The Federal Trade Commission has accepted for public comment from Time Warner

Inc. ("Time Warner"), Turner Broadcasting System, Inc. ("Turner"), Tele-Communications,

Inc. ("TCI"), and Liberty Media Corporation ("LMC") (collectively "the proposed

respondents") an Agreement Containing Consent Order ("the proposed consent order").  The

Commission has also entered into an Interim Agreement that requires the proposed

respondents to take specific action during the public comment period.

       The proposed consent order is designed to remedy likely antitrust effects arising from

Time Warner's acquisition of Turner as well as related transactions, including TCI's proposed

ownership interest in Time Warner and long-term cable television programming service

agreements between Time Warner and TCI for post-acquisition carriage by TCI of Turner

programming.

II.    Description of the Parties, the Acquisition and Related Transactions

       Time Warner is a leading provider of cable networks and a leading distributor of cable

television.  Time Warner Entertainment ("TWE"), a partnership in which Time Warner holds

the majority interest, owns HBO and Cinemax, two premium cable networks.  Time Warner

and Time Warner Cable, a subsidiary of TWE, are collectively the nation's second largest

distributor of cable television and serve approximately 11.5 million cable subscribers or

approximately 17 percent of U.S. cable television households.



       Turner is a leading provider of cable networks.  Turner owns the following "marquee"

or "crown jewel" cable networks:  Cable News Network ("CNN"), Turner Network

Television ("TNT"), and TBS SuperStation (referred to as "WTBS").  Turner also owns

         DISSENTING STATEMENT OF COMMISSIONER ROSCOE B. STAREK, III

                              In the Matter of

                          Time Warner Inc., et al.

                             Docket No. C-3709

   I respectfully dissent from the Commission's decision to issue a
   complaint and final order against Time Warner Inc. ("TW"), Turner
   Broadcasting System, Inc. ("TBS"), Tele-Communications, Inc. ("TCI"),
   and Liberty Media Corporation. The complaint against these producers
   and distributors of cable television programming alleges
   anticompetitive effects arising from (1) the horizontal integration of
   the programming interests of TW and TBS and (2) the vertical
   integration of TBS's programming interests with TW's and TCI's
   distribution interests. I am not persuaded that either the horizontal
   or the vertical aspects of this transaction are likely "substantially
   to lessen competition" in violation of Section 7 of the Clayton Act,
   15 U.S.C. 18, or otherwise to constitute "unfair methods of
   competition" in violation of Section 5 of the Federal Trade Commission
   Act, 15 U.S.C. 45. Moreover, even if one were to assume the validity
   of one or more theories of violation underlying this action, the order
   does not appear to prevent the alleged effects and may instead create
   inefficiency.

   Horizontal Theories of Competitive Harm

   This transaction involves, inter alia, the combination of TW and TBS,
   two major suppliers of programming to multichannel video program
   distributors ("MVPDs"). Accordingly, there is a straightforward theory
   of competitive harm that merits serious consideration by the
   Commission. In its most general terms, the theory is that cable
   operators regard TW programs as close substitutes for TBS programs.
   Therefore, the theory says, TW and TBS act as premerger constraints on
   each other's ability to raise program prices. Under this hypothesis,
   the merger eliminates this constraint, allowing TW -- either
   unilaterally or in coordination with other program vendors -- to raise
   prices on some or all of its programs.

   Of course, this story is essentially an illustration of the standard
   theory of competitive harm set forth in Section 2 of the 1992
   Horizontal Merger Guidelines. Were an investigation pursuant to this
   theory to yield convincing evidence that it applies to the current
   transaction, under most circumstances the Commission would seek
   injunctive relief to prevent the consolidation of the assets in
   question. The Commission has eschewed that course of action, however,
   choosing instead a very different sort of "remedy" that allows the

    Statement of Chairman Pitofsky, and Commissioners Steiger and Varney

                              In the Matter of

                             Time Warner Inc.

                             Docket No. C-3709

   The merger and related transactions among Time Warner, Turner, and TCI
   involve three of the largest firms in cable programming and delivery
   -- firms that are actual or potential competitors in many aspects of
   their businesses. The transaction merges the first and third largest
   cable programmers (Time Warner and Turner). At the same time, absent
   the relief in our consent order, the transaction would have further
   aligned the interests of TCI and Time Warner, the two largest cable
   distributors. Finally, the transaction greatly increases the level of
   vertical integration in an industry in which the threat of foreclosure
   is both real and substantial. While the transaction posed complicated
   and close questions of antitrust enforcement, the conclusion of the
   dissenters that there was no competitive problem at all is difficult
   to understand, especially since none of the public comments received
   suggested that relief was unnecessary.

   Many of the concerns raised in the dissenting Commissioners statements
   are carefully addressed in the analysis to aid public comment, which
   we append to this statement. We write to clarify our views on certain
   specific issues raised in the dissents.

   Product market. The dissenting Commissioners suggest that the product
   market alleged, "the sale of Cable Television Programming Services to
   MVPDs (Multichannel Video Programming Distributors)," cannot be
   sustained. The facts suggest otherwise. Substantial evidence,
   confirmed in the parties' documents and testimony, as well as
   documents and sworn statements from third-parties, indicated the
   existence of an all cable television market. Indeed, there was
   significant evidence of competitive interaction in terms of carriage,
   promotions and marketing support, subscriber fees, and channel
   position between different segments of cable programming, including
   basic and premium channel programming. Cable operators look to all
   types of cable programming to determine the proper mix of diverse
   content and format to attract a wide range of subscribers.

   Although a market that includes both CNN and HBO may appear somewhat
   unusual on its face, the Commission was presented here with
   substantial evidence that MVPDs require access to certain "marquee"
   channels, such as HBO and CNN, to retain existing subscribers or
   expand their subscriber base. Moreover, we can not concur that
   evidence in the record supports Commissioner Azcuenaga's proposed