When I look at Time Warner Inc. (NYSE: TWX) and I think back to the merger with AOL I cannot help but think about all the value that evaporated rather quickly. Since that time billions of dollars in write-downs and write-offs have occurred, AOL was dropped from the name, and Time Warner has emerged slowly but surely from the kinds of challenges that business schools will be doing case studies on for many years to come.
I was a shareholder of AOL and stayed with it, so I am a TWX shareholder now. I anticipated the rise in the stock over the last year and made it one of my seven picks for 2007, optimistically believing it was set for more of the same growth. So far it has been dead money in 2007, not moving much in either direction. Carl Icahn made a big move on the stock last year and has since left with a tidy profit. He stirred things up a little but in the end did not have the backing to accomplish the changes he envisioned. Dick Parsons, CEO, made just enough changes to speed up the Time Warner train but not enough to alter its course.
Today I would like to ask whatever happened to the integration and cross promoting of Time Warner companies and assets? If I go to the movies page from our own AOL Directory main page on this site I do not see a place where Warner Bros. movies are prominently featured. Why not? You can not find them announced in Time, People, Money or Sports Illustrated, either. Why not? Why don't the magazines promote AOL more heavily and the new and ever-expanding cable television services as well?
The magazines should promote all the other company assets, as should the cable company, AOL, Warner Bros. and so on. The mailers we receive for Time Warner Cable (NYSE: TWC) should mention Warner Bros. releases and features on AOL like blogs and reviews and chats, etc. All of the magazines should be promoted everywhere also. TWX could mention all of the sibling companies by name at the end of the movie credits. Showing the logos of AOL, Time Inc., Time Warner Cable would not be obtrusive in any way and it would promote the brands. But the company doesn't do any of this, which suggests that the different divisions remain territorial. If these varied media offerings don't cross-promote, what good are they tied together as one company?
Perhaps TWX is worth much more in a break-up or reorganization? Seems like Icahn was asking this very question but he decided it was falling on deaf ears so he left.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.
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Reader Comments (Page 1 of 1)
6-28-2007 @ 5:15PM
nerantzis said...
I wondered the same thing soon after it crashed. But this is why this silly crap continues. An example: When they wanted to name there cable system it took more than a year to settle on Road Runner. Warner Bros did not want to share that icon with anyone. That is symbolic of the way things were run and are run. AOL could have been big with all the cross promotion and sharing (Case actually knew what he was doing albeit 10 years to soon). Current leadership is bombastic at best. No one has the ability to think beyond their own compenstaion packages. Parsons and his minions made millions doing the safe thing for themselves.
6-28-2007 @ 5:45PM
Sheldon L said...
TWX seems to have competent managers but not strong entrepreneurial leadership.
6-28-2007 @ 8:23PM
kev said...
I agree fully! I was OUTRAGED when I went into a Warner cable payment office and I saw a poster on the wall advertising Earthlink. Here we are listening to the "great benefits of synergy" and at the same time reading in the papers how AOL's subscriber losses are a huge drain on the company and yet TWX is promoting its competitor?
Along your lines of argument - why is time.com and its other mags (other than People) so hard to find on AOL- does that make sense- when Parson's keeps making these trite little statements about how he still loves the publishing biz- shouldn't links to the mags feature prominently on AOL
You say the company has competent management but does it really- They insisted for years that they had a way to stem sub losses at AOL- the NYTimes said they screwed up the MGM transaction - their movie slate last summer was absymal - by their own admission screwed up or were late integrating the mags onto the internet-
What have they done? All the articles talk about resolution of the SEC issues - is that a great accomplishment for top management????? Especially given that Parsons was there when the AOL deal was done. The other more recent thing is the transition to a free AOL- like they had a choice- and it should have been done before they lost so many users.
6-29-2007 @ 10:01PM
Michael said...
Time Warner can promote TRANSFORMERS, that's a Viacom (Paramount and Dreamworks) production, Catoon Network can show Viacom and Disney live- action movies, Adult Swim can promote Sony Pictures movies, AOL can come into the News Corp. and NBC joint venture, TNT and TBS can show some non WB produced movies, but they can't get along with each other. Unlike Viacom, who CAN get along, and almost any media company, Time Warner has to promote them execpt theirs.
6-29-2007 @ 11:46AM
thelerner said...
Mr. Liber,
Nothing to do w/ this piece. I just discovered you on the internet. I enjoy your articles. They go beyond good advice and give important insights into market analysis. I find you the best financial blogger on the blog er block.
A new fan
Michael
7-07-2007 @ 2:31PM
Sean S. said...
The so-called "synergy" that individuals are talking on here are both tacky and nothing more than pulling the trigger on a circling of the wagon's for everyone involved; sealing off channels, magazines, and other mediums from each other till someone or all inflict serious damage on themselves. The reality is, especially considering the content-driven nature of the entertainment industry, everyone needs each other to cross-promote, co-produce, advertise, market, and partner with. This isn't to say that home-field advantage won't crop up (witness Daniel Radcliffe's interview on Larry King, the sale of movie tickets and promotion through Moviefone, the use of Time Warner Cable's Video-On-Demand to create new revenue for catalog titles). but that the idea of creating a fused juggernaut risks too much for precious little.
Let's be serious. If Money/Fortune/Business 2.0 features a fawning piece on every new AOL venture, people will simply stop reading. Ditto if Time magazine has the latest WB film splashed across its cover every week. Do you think, Sheldon, people will even be watching by the time CNN becomes re-branded with Space Ghost as a news anchor? (As amusing as that actually sounds, I doubt people would be pleased by that development).
In the end, the set-up that exists now is about as chummy as one can get without risking the integrity of the very brands you claim to want to promote.