US West Inc, which last week was talking about the multimedia database system it is developing with Oracle Corp (CI No 2,166), is stepping up its commitment to infotainment by agreeing to pay $2,500m for a 25% stake in Time Warner Inc’s Time Warner Entertainment affiliate – in which Toshiba Corp and Japanese trader Itochu Corp each has a stake – to seal a deal under which the two companies will collaborate to develop electronic superhighways – full-service cable networks offering interactive programming, entertainment and information. Some $1,000m of the US West investment will be invested to accelerate the building of the full-service network. The partners expect to complete networks for the vast majority of Time Warner’s clustered cable systems by 1998 and will share equally in the design, implementation and direction of the full-service networks. Time Warner will be diluted to a 63.27% stake, US West will have 25.51% and Itochu and Toshiba 5.61% each. US West will finance the transaction with a combination of debt and equity, paying $1,500m on closing and the balance via a note over four years. Itochu and Toshiba have rights to restore their original equity percentages without diluting US West’s interests, and US West also gets an incentive-based option to up its stake by another 8.5 percentage points. TWE Japan, created to distribute Time Warner Entertaintment’s products will be held 25% by Itochu, 25% by Toshiba, 37.25% by Time Warner and 12.75% by US West.
