Saturday, January 28, 2006

Carl Icahn to reveal plan for Time Warner

It looks like Time Warner's celebrity minority investor Carl Icahn is close to revealing his plan for Time Warner. And as he nears toward telling us all how he would like to see Time Warner get split up he's also ramping up the rhetoric on Time Warner management. Now he's challenging them over running too fat a head office and splurging too much on executive perks etc. You know the usual investor gripes.

And Dick Parsons will make sure to keep costs sensible, for there's always room to trim overheads in a company the size of Time Warner. And if the company were to break up anytime in the future then hammering away at unnercessary overhead is the thing to do.

But more interesting even than that is the likely plan that Icahn and Wasserstein are probably working on right now. For it looks as though they are planning to try and get Time Warners TV Networks, Movie Studio and AOL merged off as ONE package with one of the leading Internet portals.

Then they would spin off/sell off Time Warners cable business and publishing interests. Now this plan is not loony. And it's one we can probably buy into. But more importantly it may even be one that potential merger partners could buy into.

I could think of no greater transformational deal for Yahoo, MSN or Google than to buy Time Warners TV Networks, Movie Studio and AOL. And they have the valuations to pull it off. Icahn may well use Barry Diller as the sprat to catch the big portal mackerels.

Strategically it could make a lot of sense as media increasingly converges with technology and the Internet. Operationally it would be a great deal more challenging (as the original merger of Time Warner and AOL proved). The only leader of a portal who has any real media experience is Yahoo's Semel. Neither MSN or Google management really have the skills to manage a media empire. But in this bold new world of bullish M&A's and media convergence it may not matter as much.

And then there could even be one merger partner that all of us have overlooked. How about Time Warner TV/Movies/AOL merging with Apple. Now that would give Jobs a portal, loads of content for iTunes and the US' answer to Sony!! And Jobs has the media experience from owning/running Pixar (now part of Disney).

So selling Time Warner TV/Movies and AOL off to another company could be possible. That then just leaves spinning off/selling off Time Warners cable business and publishing, which shouldn't be hard at all.

Of course the million dollar question is will all these moves make more money for Time Warner shareholders than keeping the group as is. Well, unfortunately for Parsons nothing done to date seems to be doing anything for Time Warner shareholders. So time (pun intended) may be ticking away for him to keep to the current stratagy.

A break up of Time Warner could become increasingly likely. And it may even happen this year.

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