Time Warner Inc. chairman and CEO Richard Parsons fielded several questions from shareholders upset with the performance of the media giant’s stock at the company’s annual meeting in Atlanta Friday, and he assured investors that continuing to show strong performance, coupled with the company’s $20 billion share-repurchase program, should lift the stock.
Time Warner shares are down about 1.4% this year.
At the meeting, Parsons pointed to Time Warner’s performance -- revenue and cash flow were up 4% and 8%, respectively, in 2005 -- and added that management will continue to drive growth across the company.
He said part of the reason for Time Warner’s sluggish stock performance has been investor perception of competitive issues, which, over time, strong performance will change.
“There are a lot of investors who don’t know what the future holds, [and] what they tend to do is sit on the sidelines and put their money someplace else until they have a clearer picture they can model out and valuate,” Parsons said. “Continuing to perform in the face of those doubts over time will help to alleviate those doubts.”
Parsons added that the stock-buyback plan will reduce Time Warner’s total outstanding shares by about 25%, and the combination of a smaller float and growing earnings should affect the stock positively.
“We essentially are on a course to shrink the number of outstanding shares by more than 1 billion shares. Those who are left will have fewer other shareholders owning this company,” Parsons said. “And at the same time, we’re going to grow the earnings of the company and the performance of the company. I think the combination of those two things -- you do the math -- the stock’s got to react to that.”
Parsons’ comments had little initial impact on Time Warner shares. The stock was down 5 cents each to $17.35 per share in early afternoon trading Friday.
Parsons offered little insight into Time Warner’s continued negotiations to sell the Atlanta Braves Major League Baseball team, which could be a part of a deal with Liberty Media Corp. to swap Liberty’s 4% interest in Time Warner stock (estimated at $3 billion) for the Braves and cash.
“We still own the Braves,” Parsons said at the meeting. “As has been reported fairly widely, we’ve been in discussions about the possible sale of the Braves. Those discussions are ongoing, and it would be premature and inappropriate for me to get into that.”
He continued, “We are actively exploring the potential for a sale of the Braves. As soon as we have something more specific to report on that, we will certainly let the Atlanta community be the first to know.”