Blog Post

Time Warner or Time Waffler?

Here we go again! Time Warner rethinking what it should do with itself! How about selling the cable business? No, let’s buy an Internet company?

If you are looking for final proof that things are getting irrationally exuberant, then all you have to do is read today’s Wall Street Journal, that reports that Time Warner is thinking about buying an Internet company. Just like in 2000 when they bought AOL (or was it the other way around) and things went downhill pretty fast, from that point on.

The Journal reports that some in Time Warner want to get out of the $11.8 billion a year cable business and may want to focus entirely on the content – be it movies, television, news, publishing or the Internet.

If they did go down this route it would be ironic, not to mention, shortsighted. The largest cable and broadband company in the U.S., Comcast, is going exactly the opposite way – adding content to its pipes. The Journal writes:

One argument in favor of getting out of cable is that it would free up resources for more investment in the Web.

Given Time Waffler’s track record, it would be akin to shooting themselves in the foot. The company has a lot of challenges – including fixing the publishing arm – which needs immediate attention.

A lot of this public musing is driven by the fact that Time Warner has an heir apparent, Jeff Bewkes, who is a content guy and will likely try and do something to announce his arrival, sometime next year. Current CEO Richard Parsons rightfully believes that cable gives TW a competitive advantage – not to mention, a hedge against those bad movie decisions Hollywood-types tend to make every so often.

Subscriptions, as someone once told me, keep shareholders happy.

Read: The Wall Street Journal. (subscription required)

Disclosure: I used to work for Time Warner, which owns Business 2.0. I currently write a column for the magazine.

6 Responses to “Time Warner or Time Waffler?”

  1. Kapil Gupta

    I think its a case of competitor envy and the grass being greener on the other side… perhaps they look at Fox which hit a home run with Myspace and think “we should do something like that”.

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    Needless to say, somewhat shortsighted…

  2. Despite what CableLabs would have you believe, cable really does face some very serious challenges in the near term. They will be hard pressed to compete with Verizon’s and AT&T’s fiber offerings without huge investments in their networks. That could be one reason why TW wants to off the C.

  3. Jacomo,

    when that Earthlink network works, they should consider buying it then. I think what TIme warner needs to do is get its house in order. If there is a company will all the assets to win in the post broadband world, it is Time Warner, if only they can get out of their own way. Politics killed many a great company, and why should it be any different this time around.

  4. What they should be doing is buying Earthlink so they can get access to the Wireless Mesh Network these folks are building nationwide.
    They already have made attempts at bidding on Muni Wireless Metworkswithout much if any success.
    When combined with the new AWS (Cell) spectrum they own and Sprints partnership to build this voice network they would be able to effectively compete with AT&T and Verizon Wireless in their markets.

    Jacomo