Analyst to TWX: Don’t Do It
by Mike Farrell -- Multichannel News, 10/5/2009 2:00:00 AM
Pali Research media analyst Richard Greenfield is betting that Time Warner Inc. will resist the temptation to use its considerable cash reserves for an acquisition spree.
In a research note last Wednesday, Greenfield wrote that although some of Time Warner’s assets are not performing as well as others — TBS and TNT have not had the same ratings success of NBC Universal’s USA Network and DC Comics hasn’t leveraged its library into new franchises like rival Marvel Entertainment — he still sees bright spots ahead. Greenfield believes there is still “substantial value-creation potential” within Time Warner’s existing assets: its management team is in the early stages of rebuilding its credibility, it jettisoned its cable systems earlier this year and it is now in the process of spinning off its AOL online unit. The troubled publishing unit may be next to go, he added.
Time Warner has been among the names bandied about as a possible suitor for Vivendi’s 20% stake in NBC Universal, for cable network the Travel Channel, Scripps Networks International and Dreamworks Animation. And Time Warner is sitting on about $9 billion in cash it received as a dividend in relation to its spinoff of Time Warner Cable.
“We hope Jeff Bewkes and Time Warner understand the pitfalls of large-scale acquisitions and resist the temptation,” Greenfield wrote. “We believe he/they do.”
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