Time Warner

Time Warner
Type Public (NYSE: TWX)
Industry Conglomerate
Founded Merger between Time Inc. and Warner Communications (1990)
acquired TBS (1996)
subsequently purchased by AOL (2001)
spun off Time Warner Cable, then AOL (2009)
Headquarters Time Warner Center
Midtown Manhattan, New York City, U.S.
Area served Worldwide
Key people Jeffrey L. Bewkes
(Chairman) & (CEO)
Products See list of assets owned by Time Warner.
Revenue increase US$25.8 Billion (FY 2009)[1]
Operating income increase US$4.55 Billion (FY 2009)[1]
Net income increase US$2.47 Billion (FY 2009)[1]
Total assets decrease US$65.7 Billion (FY 2009)[2]
Total equity decrease US$33.4 Billion (FY 2009)[2]
Employees 31,000 (2010)[3]
Website www.timewarner.com
Time Warner Center taken from Central Park West

Time Warner (formerly AOL Time Warner) (NYSE: TWX) is the world's second largest entertainment conglomerate in terms of revenue (behind Disney and ahead of News Corporation and Viacom), as well as the world's largest media conglomerate,[4][5][6][7] headquartered in the Time Warner Center in New York City.[8] Formerly two separate companies, Warner Communications, Inc. and Time Inc., (along with the assets of a third company, Turner Broadcasting System, Inc.) form the current Time Warner, with major operations in film, television and publishing. Among its subsidiaries are New Line Cinema, Time Inc., HBO, Turner Broadcasting System, The CW Television Network, TheWB.com, Warner Bros, Kids' WB, The CW4Kids, Cartoon Network, Boomerang, Adult Swim, CNN, DC Comics, Warner Bros. Games, Castle Rock Entertainment, New Line Television, Picturehouse, Warner Premiere and Warner Independent Pictures.

Contents

History

1976

In 1972, Kinney National Company spun off its non-entertainment assets due to a financial scandal over its parking operations and renamed itself Warner Communications Inc.

It was the parent company for Warner Bros. Pictures and Warner Music Group during the 1970s and 1980s. It also owned DC Comics and Mad, as well as a majority stake in Garden State National Bank (an investment it was ultimately required to sell pursuant to requirements under the Bank Holding Company Act). Warner's initial divestiture efforts led by Garden State CEO Charles A. Agemian were blocked by Garden State board member William A. Conway in 1978; a revised transaction was later completed in 1980.

In 1976, Nolan Bushnell sold his Atari company to Warner Communications for an estimated $28–32 million. Warner made considerable profits (and later losses) with Atari, which it owned from 1976 to 1984. While part of Warner, Atari achieved its greatest success, selling millions of Atari 2600s and computers. At its peak, Atari accounted for a third of Warner's annual income and was the fastest-growing company in the history of the United States at the time.

In 1975, Warner expanded under the guidance of CEO Steve Ross and formed a joint venture with American Express, named Warner-Amex Satellite Entertainment, which held cable channels including MTV (launched 1981), Nickelodeon (launched 1979) and The Movie Channel. Warner bought out American Express's half in 1984, and sold the venture a year later to Viacom, which renamed it MTV Networks.

1985

In 1980, Warner purchased The Franklin Mint for about $225 million. The combination was short lived: Warner sold The Franklin Mint in 1985 to American Protection Industries Inc. (API) for $167.5 million. However, Warner retained Franklin Mint’s Eastern Mountain Sports as well as The Franklin Mint Center, which it leased back to API.[9]

In February 1983, Warner expanded their interests to baseball. Under the direction of Caesar P. Kimmel, executive vice president, bought 48 percent of the Pittsburgh Pirates for $10 million. The company then put up its share for sale in November 1984 following losses of $6 million. The team's elderly majority owner, John W. Galbreath, soon followed suit after learning of Warner's actions.[10]

In 1984, due to the video game crash of 1983, Warner sold the consumer division of Atari to Jack Tramiel. It kept the arcade division and renamed it Atari Games. They sold Atari Games to Namco in 1985, and repurchased it in 1994, renaming it Time-Warner Interactive, until it was sold to Midway Games in 1996. In a long-expected deal, Warner Communications announced on May 11, 1988 they were acquiring Lorimar-Telepictures; the acquisition was finalized on January 12, 1989. The merger of Time Inc. and Warner Communications was announced on March 4, 1989. During the summer of that same year, Paramount Communications (formerly Gulf+Western) launched a $12.2 billion hostile bid to acquire Time, Inc. in an attempt to end a stock-swap merger deal between Time and Warner Communications. This caused Time to raise its bid for Warner to $14.9 Billion in cash and stock. Paramount responded by filing a lawsuit in a Delaware court to block the Time/Warner merger. The court ruled twice in favor of Time, forcing Paramount to drop both the Time acquisition and the lawsuit, and allowing the formation of Time Warner which was completed on January 10, 1990.

1990

In early 1990, the combined companies were named Time Warner. This company subsequently acquired Ted Turner's Turner Broadcasting System in October 1996. Not only did this result in the company (in a way) re-entering the basic cable television industry (in regards to nationally available channels), but Warner Bros. also regained the rights to their pre-1950[11][12] film library, which by then had been owned by Turner (the films are still technically held by Turner, but WB is responsible for sales and distribution).

Time Warner had also been owner of the Six Flags Theme Parks chain during the 1990s after near bankruptcy. It sold all Six Flags parks and properties to Oklahoma based Premier Parks on April 1, 1998.

2000

In 2000, a new company called AOL Time Warner, with Steve Case as chairman, was created when AOL purchased Time Warner for US$164 billion.[13] The deal, announced on January 10, 2000[14] and officially filed on February 11, 2000,[15] employed a merger structure in which each original company merged into a newly created entity. The Federal Trade Commission cleared the deal on December 14, 2000,[16] and gave final approval on January 11, 2001; the company completed the merger later that day.[17] The deal was approved on the same day by the Federal Communications Commission,[15] and had already been cleared by the European Commission on October 11, 2000.[18] The shareholders of AOL owned 55% of the new company while Time Warner shareholders owned only 45%,[14] thus the smaller AOL bought out the far larger Time Warner.

After the merger, the profitability of the ISP division (America Online) decreased. Meanwhile, the market valuation of similar independent internet companies drastically fell. As a result, the value of the America Online division dropped significantly. This forced a goodwill write-off, causing AOL Time Warner to report a loss of $99 billion in 2002 — at the time, the largest loss ever reported by a company. In 2003, the company dropped the "AOL" from its name, and removed Steve Case as executive chairman in favor of Richard Parsons, with AOL remaining a part of the company. That same year, Time Warner spun off Time-Life's ownership under the legal name Direct Holdings Americas, Inc. Case resigned from the Time Warner board on October 31, 2005.[19]

In 2005, Time Warner was among 53 entities that contributed the maximum of $250,000 to the second inauguration of President George W. Bush.[20][21][22] On December 27, 2007 newly installed Time Warner CEO Jeffrey Bewkes discussed possible plans to spin-off Time Warner Cable and sell-off AOL and Time Inc. This would leave a smaller company made up of Turner Broadcasting, Warner Bros and HBO.[23] On February 28, 2008 co-chairmen and co-CEOs of New Line Cinema Bob Shaye and Michael Lynne announced their resignations from the 40-year-old movie studio in response to Jeffrey Bewkes's demand for cost-cutting measures at the studio, which he intended to dissolve into Warner Bros.

On May 28, 2009, Time Warner announced that it would spin off AOL as a separate independent company, with the change occurring on December 9, 2009.

Transactions made since the AOL-Time Warner merger

Since the merger, a number of transactions have taken place:

The CW Television Network

See also: The CW Television Network

On January 24, 2006, CBS Corporation and Time Warner announced that they were to create a new broadcast network, The CW Television Network. The network officially debuted on September 18, 2006. The network formally debuted on September 20 with the 2 hour premiere of America's Next Top Model.

The network is the result of a merger of The WB Television Network (a Time Warner holding) and UPN (a CBS Corporation holding). CBS Corporation and Time Warner each own 50% of the network. Tribune Broadcasting (previously owned a 25% stake on The WB) and CBS Corporation contributed its stations as new network affiliates, although Time Warner's sole owned TV station (via Turner) Atlanta's WTBS (now WPCH) remains an independent station, competing against CBS-owned CW O&O WUPA.

Time Inc.

The Time Inc. division publishes approximately 150 titles worldwide. It is the leading magazine publisher in the U.S. and UK, and is understood to be profitable at US$5 billion in annual revenues.[26] As of January 2007, the unit is experiencing downsizing.[27] In January 2007, the Bonnier Magazine Group agreed to acquire 18 magazines that Time Inc. was divesting. The magazines in the package employed 550 people and included Field & Stream, Outdoor Life, Ski, Yachting, and TransWorld Snowboarding, as well as 11 other titles that were part of Time Inc.'s Time4Media Group. Also included were Parenting, and Baby Talk, which were part of the Parenting Group.[28]

Financials

When the AOL-Time Warner merger was announced in January 2000, the combined market capitalization was $350 billion. http://www.timewarner.com/corp/newsroom/pr/0,20812,667602,00.html. It has subsequently fallen dramatically. Even by the time the merger was approved by the FCC and FTC just one year later on February 11, 2001, the company's market capitalization had plunged to $208.6 billion. By 2009, the company's value had tumbled even further, to just $65.7 billion, or roughly one-sixth of its value at the height of the dot.com bubble era when the deal was announced.Time Warner 2009 Annual Report

For fiscal year 2002 the company reported a $99 billion loss on its income statement [29] because of $100 billion in non-recurring charges, almost all from a writedown of the goodwill (intangible asset) from the merger in 2000. This loss is one of the largest in corporate history. The value of the AOL portion of the company had dropped sharply with the collapse of the Internet boom, in the early 2000s.

On February 4, 2009, Time Warner posted a $16.03 billion loss for the final quarter of 2008, compared with a $1.03 billion profit for the same three months of 2007.[30]

Commercial properties

Time Warner Inc. owns several large properties in New York City; certain buildings in the Rockefeller Center complex and adjacent office towers house its main offices; one of which houses a CNN news studio. In late 2003, Time Warner finished construction of a new twin-tower complex, designed to serve as additional office space, facing Columbus Circle on the southwestern edge of Central Park. Originally called the AOL Time Warner Center, the 755-foot (230 m), 55-floor mixed-use property was renamed Time Warner Center when the company itself was renamed.

Board of Directors

As of June 24, 2010.[31]

Senior Executives

Time Warner Inc.

Jeffrey L. Bewkes, Chairman and CEO

And six executive vice presidents, most with additional, functional titles:

Subsidiaries

Competition

Time Warner faces industry competition from traditional media companies such as Vivendi, CBS Corporation, Viacom, The Walt Disney Company, NBC Universal, and News Corporation. Time Warner's business may be severely impacted by the increasing viewership of feature films, television programming and other content online with low ad-income, which decreases company revenues.[33]

Box office receipts have been rising while the growth rate of DVD sales have recently been declining, which affects Warner Brothers' growth prospects and revenues.[34]

Past names

  • Time Inc. (1910, 1922–1990)
  • Warner Bros. Pictures Inc. (1923–1967)
  • Seven Arts Productions Inc. (1957–1967)
  • Kinney National Company (1966–1971)
  • Warner Bros.-Seven Arts (1967–1971)
  • Warner Communications (1971–1990)
  • Time Warner (1990–1992, 2003–present)
  • Time Warner Entertainment (1992–January 10, 2001)
  • AOL Time Warner Inc. (January 11, 2001–2003)

See also

  • Time-Life - former direct marketing (books, music, video) subsidiary;
  • Ted Turner
  • Steve Case
  • Reel Works Teen Filmmaking - a documentary youth program sponsored by Time Warner
  • List of conglomerates
  • List of United States companies
  • List of assets owned by Time Warner

Footnotes

  1. ↑ 1.0 1.1 1.2 Time Warner (TWX) annual SEC income statement filing via Wikinvest
  2. ↑ 2.0 2.1 Time Warner (TWX) annual SEC balance sheet filing via Wikinvest
  3. ↑ "Company Profile for Time Warner Inc (TWX)". http://zenobank.com/index.php?symbol=TWX&page=quotesearch. Retrieved 2010-05-13. 
  4. ↑ CNN. http://money.cnn.com/magazines/fortune/global500/2009/industries/145/index.html. Retrieved May 25, 2010. 
  5. ↑ http://www.viacom.com/investorrelations/Investor_Relations_Docs/Q407%20Web%20Deck%20FINAL.pdf
  6. ↑ Siklos, Richard (February 9, 2009). "Why Disney wants DreamWorks". CNN. http://money.cnn.com/2009/02/09/news/companies/disney_dreamworks.fortune/?postversion=2009020914. Retrieved May 25, 2010. 
  7. ↑ News Corporation - Annual Report 2007
  8. ↑ TimeWarner.com Fact Sheet Page
  9. ↑ Dinger, Ed (1998). "The Franklin Mint". International Directory of Company Histories. 69. http://findarticles.com/p/articles/mi_gx5202/is_1998/ai_n19122709. Retrieved 2008-05-23. 
  10. ↑ Galbreaths to Sell Pirates PITTSBURGH, New York Times
  11. ↑ You Must Remember This: The Warner Bros. Story (2008), p. 255.
  12. ↑ WB retained a pair of features from 1949 that they merely distributed, and all short subjects released on or after September 1, 1948; in addition to all cartoons released in August 1948.
  13. ↑ "Top Mergers & Acquisitions (M&A) Deals". 2007-03-28. http://www.manda-institute.org/en/statistics-top-m&a-deals-transactions.htm. Retrieved 2007-05-05. 
  14. ↑ 14.0 14.1 "America Online and Time Warner Will Merge to Create World's First Internet-Age Media and Communications Company". Time Warner corporate homepage. 2000-01-10. http://www.timewarner.com/corp/newsroom/pr/0,20812,667602,00.html. Retrieved 2007-05-06. 
  15. ↑ 15.0 15.1 Federal Communications Commission (2003-03-25). "America Online-Time Warner Merger Page". Federal Communications Commission homepage. http://www.fcc.gov/mb/aoltw/aoltw.html. Retrieved 2007-05-06. 
  16. ↑ Federal Trade Commission (2000-12-14). "FTC Approves AOL/Time Warner Merger with Conditions". Federal Trade Commission website. http://ftc.gov/opa/2000/12/aol.shtm. Retrieved 2007-05-06. 
  17. ↑ Patrick Ross, Evan Hansen (2001-01-11). "AOL, Time Warner complete merger with FCC blessing". CNET News.com. http://news.cnet.com/2100-1023-250781.html. Retrieved 2007-05-06. 
  18. ↑ "EU statement: AOL, Time Warner". BBC News Online. 2000-10-11. http://news.bbc.co.uk/2/hi/business/967049.stm. Retrieved 2007-05-06. 
  19. ↑ "CNN.com - Steve Case quits Time Warner board - Oct 31, 2005". CNN. http://edition.cnn.com/2005/BUSINESS/10/31/stevde.case.aol/. Retrieved May 25, 2010. 
  20. ↑ Drinkard, Jim (2005-01-17). "Donors get good seats, great access this week". USA Today. http://www.usatoday.com/news/washington/2005-01-16-inauguration-donors_x.htm. Retrieved 2008-05-25. 
  21. ↑ "Financing the inauguration". USA Today. January 16, 2005. http://www.usatoday.com/news/washington/2005-01-16-inaugural-donors_x.htm. Retrieved 2008-05-25. 
  22. ↑ "Some question inaugural's multi-million price tag". USA Today. 2005-01-14. http://www.usatoday.com/news/washington/2005-01-14-price_x.htm. Retrieved 2008-05-25. 
  23. ↑ Bloomberg.com: Time Warner May End Reign as Largest Media Company
  24. ↑ Ali, Rafat (August 7, 2008). "Time Inc. Strange Buy: Acquiring Reader's Digest School Funding Raising Unit QSP For $110 Million". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2008/08/07/AR2008080702430.html. Retrieved 2008-09-03. 
  25. ↑ "Time Warner completes cable spin-off". BusinessWeek. http://www.businessweek.com/ap/financialnews/D96TSJHG0.htm. Retrieved 2008-03-14. 
  26. ↑ NYPost
  27. ↑ "As Time Inc. Cuts Jobs, One Writer on Britney May Have to Do", New York Times, January 15, 2007. Retrieved March 30, 2008.
  28. ↑ NY Post
  29. ↑ TWX annual statement
  30. ↑ Time Warner reports huge loss
  31. ↑ http://www.timewarner.com/corp/management/board_directors/index.html
  32. ↑ Senior Corporate Executives, company website. Retrieved 2010-07-27.
  33. ↑ Time Warner profile
  34. ↑ Recent 10Q Report

References

  • Triangle Business Journal: Time Warner Cable thinking green with local HQ

External links