AOL-Time Warner's Money Pit

ElitusPrime writes: "There's an interesting analysis of the recently released balance sheet net worth of AOL Time Warner. The net worth of the largest media conglomerate on earth has now been slashed by more than one-third. The conclusion, not surprisingly, is that the merger never should have happened. But there's some interesting financial analysis to show exactly how bad the merger has been for Time Warner."

Comments

If it was only US$50 Billion...

[AKAJack]

...but unfortunatly the value of AOL/Time Warner is down over $150 billion if you look at stock prices now and what they were when the "merger" took place.

Don't expect them to answer any questions about:

What assets EXACTLY did you write down?
What about the rest of that lost value, when are you going to take that hit?

Inflated .com dollars from AOL didn't buy Time/Warner. It was a stock trade that did it and that's what will kill Time/Warner on their end of this "deal."

Big problems brewing for the future.

Spin Doctor

[phriedom]

Wow, you sure have a bunch of nice buzzwords packed into that short post. But I don't see how any "synergy" is going to turn the AOL unit into a money-making and growing division like it used to be. They are not going to be "out-competing" my local ISP. If they were to start making T-W content exclusive to AOL, they are only going to be choking off the potential for T-W.

AOL made a sweet deal. They turned a vast amount of very perishable stock value into some real assets by buying T-W. T-W was blinded by dollar signs in their eyes. They looked at the (temporary) value of the stock, instead of (real) value of the AOL company.

I know they are not going to shrivel up and blow away or anything like that, but if I was a T-W stockholder I would be pretty pissed off. There were billions of dollars here last time I looked. Where did it go?

I shouldn't be too hard on them though. Tyco, who has nothing to do with the dot-com bubble, and nothing to do with energy trading, and makes and sells actual products rather than just having intellectual property, has dropped in value by 30 BILLION dollars in the last 2 weeks. Think about that: 30 billion dollars that used to belong to stockholders has EVAPORATED in the last 14 days.

Interesting...

[OneFix]

As the leading U.S. broadband provider, Time Warner Cable added 278,000 net high-speed data subscribers this quarter, for a total of 2.2 million. This is an increase of 1.0 million high-speed data subscribers, or 86%, since the same period last year. At the end of the quarter, digital subscribers represented 28% of basic cable subscribers while high-speed data subscribers represented 11% of eligible homes passed.

It looks like they are trying to spin this as a positive, but if we belive this story, they are almost treated as a liabilty!!!

Ok...so exactly how are they going to spin the fallout when they see a mass exodus after they implement these bandwidth usage quotas...it's been discussed before, regardless of their usage, the average user will flee at the first hint of bandwidth usage quotas...

where? read second paragraph of the statement.

[Erris]

Revenues for the quarter increased 4% over the same period in 2001 to $9.8 billion. Subscription revenues increased 14% to $4.7 billion, reflecting strong subscriber growth in the Company's AOL and Cable businesses. Content and Other revenues were essentially flat at $3.2 billion, primarily because of robust theatrical results in the current year, offset by strong prior-year syndication sales. Advertising and Commerce revenues declined 13% to $1.8 billion, reflecting weakness in the overall advertising market and difficult comparisons against last year.

So, duh, the cable business is growing while the traditional entertainment is dying. No news here, exept trolls like to call it a "dot com bubble burst" and other stupid shit like that. Nope, sorry, the internet subscription is doing well, the rest is flat or sagging. When was the last time you read Time or any other monthly print magazine without wondering what kind of clueless hermit would consider any of it news? Is it any supprise that assets like that might lose value?

Where did the money go? It was "good will" overpayment for those "crown jewels", Time Warner. Enetertainment is not an easy business to be in, especially right before a small recession. The internet business, however, is a good bet. When things get tough what are you going to axe, Time, cable TV or your internet connection? I don't have the first two and I'm doing well.

Dead trees is dead business. Pththth-fit! Good riddance, now those trees can be used on things like houses that don't fill up landfills as fast. Books are doing well, and that is nice but the mags sag. Here, read it for yourself:

Publishing's EBITDA grew 14% in the quarter on revenue gains of 3%. Revenue growth reflected increases in Advertising and Commerce as well as Content and Other revenues, which were partially offset by a decline in Subscription revenues.