Time Warner Inc. chief financial officer John Martin offered few details on the media giant's planned split with its cable unit slated for around year-end, but told an investment conference audience last week not to expect the company to go on a wild acquisition spree after the separation.
Martin towed the company line at the Merrill Lynch 2008 Media Fall Preview conference in Marina Del Rey, Calif., last Wednesday, saying that after the split Time Warner will maintain a disciplined approach when it comes to acquisitions.
Martin seemed to dismiss speculation that Time Warner would target NBC Universal after the split — he said he didn't think the company, owned 80% by General Electric and 20% by Vivendi, was for sale. And he added that any potential acquisition would have to represent a good fit with the rest of Time Warner's assets, as well as a reasonable price. He pointed to the company's decision to drop out of the auction for The Weather Channel, which NBCU agreed to purchase for $3.5 billion earlier this year
“We decided to pass not because we didn't feel like The Weather Channel would have been a great strategic fit for Turner,” Martin said. “… We reached a point of intolerance as it came to the economics. That level of discipline will apply to everything else going forward.”
Martin wouldn't offer any more insight into the planned separation of Time Warner Cable.
Time Warner said in May that it would relinquish its 84% interest in Time Warner Cable, which would issue a one-time cash dividend of about $10.9 billion to shareholders. Time Warner Inc. stands to receive about $9.25 billion in cash as a result of that dividend payment. But the method of distributing the shares was not detailed. Martin said at the Merrill conference that more details would be forthcoming closer to the split date.
While it may be getting out of the cable-systems business, Martin said that Time Warner Inc. remains bullish on cable networks. He added that its cable networks continued to perform well despite the sluggish economy.
Turner Entertainment's decision many years ago to continuously invest in programming is paying off, he added.
“This year's upfront was a validation of that strategy,” Martin said. “We do believe we saw a shift of broadcast dollars over to cable and the company that disproportionately benefited in cable was Turner. We believe we ended up at the top end of the television universe in front of upfront results.
“We're really, really pleased. We believe that is really because Turner provides substantial reach with high-quality programming, that's something that has been a strategy in place for years, and we are going to continue to build on that. We are going to make more original programming investments in our Turner Entertainment networks than ever before in the company's history.”