With the February 14 announcement that Time Warner (TW) is selling most of its print magazines to little-known Midwest publisher Meredith Corporation, the media giant continues its great shrinking act which dates back to 2001. At the time of the AOL-Time Warner merger in January of 2000, the market capitalization of the company was $350 billion. Today its book value is $30 billion. In an understatement in a conference call last week, John K. Martin, Time Warner’s chief financial officer, said “very challenging industry conditions” are weighing heavily on the company.
TW isn't selling everything, however, as it will be keeping the magazines that Meredith doesn't want, including Time, Fortune, Sports Illustrated, and Money magazines. Meredith (which publishes Better Homes and Gardens and Ladies’ Home Journal) did take over many others from TW including People magazine, which has lost 12 percent of its newsstand business in just the last six months.
Jeffrey Bewkes, TW’s chief executive, has refused to let go of Time magazine, even though its revenues have dropped roughly 30 percent over the past five years and continues to be a drag on earnings. An insider noted that “Time’s name is on the door … [and] I think Jeff feels it would be better to hang onto it and not sell it now for what would be a low price.” That may be another mistake that the company will regret, as that price could get even lower. TW’s merger with AOL in early 2000 soon went south as it lost subscribers at an alarming rate, dropping AOL’s market value from $226 billion to about $20 billion. The company unloaded the remains of AOL in 2009.
In 2001, TW sold its interest in World Championship Wrestling in March 2001, followed by its sale of the Atlanta Hawks, the Atlanta Thrashers, and its operating rights to Philips Arena in 2003. Soon after, TW sold its Comedy Channel to Viacom, and then in 2004, it sold its Warner Music Group. Later that year it closed down its CNNfn financial news channel, and liquidated its holdings of Google stock.
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