Population Statistic: Read. React. Repeat.
Tuesday, February 07, 2021

Oh, that wacky Carl Icahn. In the ongoing quest to take down Time Warner, the famed corporate raider got his investment banking partner Lazard to issue a lengthy recommendation for breaking up the world’s largest media company into four separate parts.

The disassociated foursome:

  • AOL - Because it’s not really dead/obsolete, the thinking goes — it’s just not nimble enough as part of a conglomerate to morph into a viable online player.
  • A “content company” - Basically, Warner Brothers, HBO and the rest of the television/movie properties. Not sure why Lazard is characterizing this portion as strictly a content play.
  • A publishing house - Presumably, a reconstituted Time Inc., which would initially consist purely of magazine publishing now that Time Warner Book Group’s been jettisoned.
  • Time Warner Cable - The digital pipes, and the nation’s largest cable provider second-largest cable provider (well behind No. 1 Comcast). Probably the one spinoff that makes the most sense, especially in terms of the expanding service offering of digital phone and broadband Internet. In fact, this is just an overkill of TW’s existing plans to sell off 18 percent of the cable unit.

The argument is that bigger ain’t better — contradicting the overriding corporate wisdom of the ’90s that brought TW into existence. Michael Wolff gives good insight into the rationalization, especially in how it makes TW a rudderless ship and, thus, almost beside the point.

As much as the synergistic energies never quite congealed, Icahn couldn’t care less about whether or not the parts will end up greater than the sum here. He’s looking to unlock the share values, and a breakup is the quick-fix way to do it. It doesn’t represent any new thinking on his part; the mentality is identical to his famed rape-and-pillage tactics from the ’80s. The only difference is the mechanism being used.

- Costa Tsiokos, Tue 02/07/2021 08:51:51 PM
Category: Media, Business | Permalink |

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