There has been pressure on the shares of Time Warner (NYSE: TWX) for a couple of days now. Today the stock is down nearly 30 cents to $14.09 after losing about 40 cents yesterday. Lehman put out a rough report on media stocks yesterday, which did not help the company's cause.
The real reason that Time Warner shareholders may be sullen is that they are concerned about a possible Yahoo! (NASDAQ: YHOO) buyout of AOL, rumored to be in the works. Analysts think that AOL may be worth $10 billion. Most experts considering such deal figure see Yahoo! giving Time Warner a 30% stake in Yahoo! in exchange for all of the AOL assets.
The deal is a bad one because Yahoo!'s stock is a poor currency. With such a large position, it would be nearly impossible for Time Warner to liquidate its stake. The news of an AOL deal in place of a Microsoft (NASDAQ: MSFT) buyout of Yahoo! at $33 would almost certainly hammer Yahoo! shares and might even push them below $15.
The most significant concern for investors holding Time Warner stock is that Yahoo! has demonstrated that it is badly run and still struggling to significantly improve its revenue growth. Getting a piece of a broken company may get AOL a new home, but what Time Warner shareholders would get in return would probably not be worth much.
Douglas A. McIntyre is an editor at 247wallst.com.
Holiday hiring slow for retailers
Closing Bell: What sell-off? (AIG, ABK, EPR, MBI, JAVA, ORCL, ERTS)
Chasing Value: 2009 blazing picks -- Q3 review 
