#time warner

David Carr and Ravi Somaiya on the spin-off of Time Inc. from Time Warner:

The new entity will start off with $1.3 billion in debt, including $600 million that will go toward a one-time cash dividend to Time Warner shareholders. That stands in stark contrast to Rupert Murdoch’s News Corporation, which was given a $2 billion cash cushion when it was spun off into a separate company last year. At approximately three times earnings, Time Inc.’s debt is high-risk, and Moody’s has rated it at less than investment grade.

As recently as 2006, Time Inc. produced about $1 billion in earnings, a figure that is now down to $370 million. Revenue has declined in 22 of the last 24 quarters, which has tried the patience of both investors and Jeffrey L. Bewkes, Time Warner’s chief executive.

I’m a bit late to this, but there are a couple staggering things here. Earnings have been sliced by almost two-thirds — in just eight years. And the amount of debt they’re saddling this thing with seems absolutely insane. It’s really hard to see how Time Inc. exists in ten years. Maybe even five.

David Carr spoke with law professor Susan Crawford about her new book about the telecom industry:

In a recent conversation, she explained that wired and wireless connections, building blocks of modern life, are now essentially controlled by four companies. Comcast and Time Warner have a complete lock on broadband in the markets they control, covering some 50 million American homes, while Verizon and AT&T own 64 percent of cellphone service. Don’t get her started on the Comcast-NBCUniversal merger unless you have some time on your hands.

“They have acted in parallel to exclude competitors and used every lever they had to gain control over their markets. My whole book is essentially an argument to buy stock in cable companies,” she said with a laugh.

Her main argument is not that these giant companies are evil, but rather that they’ve perfected the art of dominating their industries, with the government doing little to stop it — which is ultimately going to hurt us all.

Nice NYT Q&A with Steve Case by Adam Bryant. On the topic of “what he would have done differently” after the AOL/Time Warner merger:

One would be that if we’d brought these companies together — and I say this somewhat in jest, but it makes a point — we should have fired the top 50 executives, myself included, and hired 50 new executives who brought new perspectives and could look at this through the focus on the future, not in the rearview mirror. It would have done better. There is a reason why that happens whenever a new president is elected. They bring in an entirely new team to get behind their vision and execute that vision. If it were the same 50 people from the prior administration being asked to implement new policies for the new president, it would not work.

An interesting way to think about a mega-merger: combine the assets and get new blood in there to run it.

After my post last night about HBO breaking its cable addiction, a number of you pointed out that this will never happen because HBO is owned by Time Warner.

That’s true — but remember that Time Warner Cable hasn’t been affiliated with Time Warner since 2009. They share a name (which they use under license), but they’re a completely independent company. Time Warner owns HBO, not Time Warner Cable. 

If you want proof of just how unaffiliated the two are now, look no further than the fact that Time Warner Cable is only now getting HBO Go access. Comcast and a dozen other cable providers got access first as TW/TWC negotiations dragged on. 

So while it’s a bit confusing, HBO’s Time Warner parent shouldn’t hamper my plan. Time Warner should be looking towards the future, not their old cable subsidiary.