Wednesday, January 13, 2016

Has Time Warner Lost Its Way?

The challenge for a company as it grows is how to successfully manage its parts in a way that makes the combined entity that much stronger.  But sometimes, too much growth or too many business units operating independently can cause bits of implosion.  They can distract from the core mission or lead to missed opportunities.  And when a company is public with active investors, the value of the parts being greater than the whole creates new pressures on the management team.

Time Warner Inc has been one of those companies under such pressure.  As an acquisition target of AOL, it led to complete disarray.  Once divorced from that mistake, it tried to right itself only to feel pressure to continue to split off pieces.  Time Warner Cable was spun off as was the Time Inc. company.  And what is left are the Turner cable networks like TBS and TNT, the HBO premium cable subscription network, and the Warner Bros movie studio.  But investors want more and believe that Time Warner needs to be either split again or sold to another with deeper pockets.

Recently, some rumors have emerged that Apple could be interested in buying them to support their Apple TV brand.  But if you look at the Apple business, they are a technology company and aggregators of content, from music to video to apps, that they can bundle and sell to customers through their technology.  They don't have the management experience to run a content company.  And owning an HBO or TBS might limit their ability to aggregate other video content.

A more likely scenario might be for Murdoch and the Fox team or Malone and the Liberty Media team to kick the tires on Time Warner.  And ABC might be interested too.  As for CBS, an ailing owner might make it harder for them to manage such a large acquisition.  Time Warner Inc has shown a willingness to part with companies and a spin off of HBO could be a more realistic move in the short run to allay investor concerns.  Although given the recent direction of the stock market these days, the timing to sell may not be right at the moment.

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