NEW YORK -- Gerald Levin, chairman of Time Warner, told a meeting of the company�s stockholders Thursday that TW and Disney have reached an �agreement in principle� ending the dispute that culminated earlier this month with TW temporarily dropping a number of ABC-owned TV stations from its cable systems.

Speaking from the stage of the celebrated Apollo Theater in Harlem, site of the stockholders� gathering, Levin said that Dick Parsons, president of TW, and Bob Iger, chairman of the ABC Group and also president of Walt Disney Intl., shook hands on the deal, which will be signed in the next few days.

The two sides declined to discuss any of the details of the agreement, at least in part because of the bitterness that still exists between Disney and Time Warner over the avalanche of bad publicity that crashed over the industry when cable subscribers in parts of New York, Los Angeles, Philadelphia and other cities were deprived of their favorite ABC shows for 39 hours on May 1 and 2.

But knowledgeable observers say TW Cable will make the concession of moving the Disney Channel from pay to basic on all of its cable systems and will probably also sign up for two fledgling Disney networks, Soap Net and Toon Disney. One source says TW�s payment to Disney for these deals will hit $1 billion-$1.3 billion over the next 10 years. Disney may even agree to give TW�s systems an extension for ESPN, the most expensive of all of the nationally distributed cable networks. Disney owns 80% of ESPN, Hearst Broadcasting the other 20%.

In exchange, TW Cable will get long-term deals, well beyond the standard three-year renewals, to carry ABC-owned TV stations in all of the O&O markets where TW owns a cable system.

Beating the deadline

Time Warner clearly wanted to draw up a contract ready for signing with Disney well in advance of the July 15 deadline on which both sides had agreed after the May 1 fiasco. A subdued Levin told stockholders that the yanking of the ABC signals from cable arose out of �an unfortunate failure of communication� between TW and Disney. �It was a regrettable event, and we�ve apologized to our consumers.�

More TV news cameras showed up at the stockholders� meeting than usual because of a well-publicized protest against the proposed joint venture between Time Warner and the EMI Music Group. Representatives of the National Political Congress of Black Women stationed outside the Apollo handed out leaflets declaring that EMI artists like Master P perform �misogynistic music that glorifies violence, drug abuse and pornography against women.�

To a stockholder question about the leaflet, Levin said, �It�s inappropriate for me to say anything about the businesses of EMI because the joint venture has many months to go. But Time Warner would never put out material that incites violence or degrades anyone.�

Special meeting

About the proposed AOL/TW coupling, Levin said there�ll be a �special meeting� next month of the Time Warner board to vote on the merger. He predicted that the regulatory bodies would approve the merger because �there�s no competing overlap� between AOL and TW, and the merger reps a marriage of �new media and old media.�

Levin went out of his way to comfort one clearly distraught stockholder who claimed that Time Warner was spending reams of money promoting the Batman comic books at the expense of Superman. �Plans are in the works for Superman to return in a more expressive format,� Levin said. �Please be assured that Superman holds a cherished place in our heart,� he added, with a smile.