AOL and Time Warner Merge.

Well Funny money bites the hand that feeds it: TPTB.

So here we finally have the beginning of the end of bubble.com Funny money buys something of value, and the loser is: the original owner of something of value.

AOL's shareholders will own 55% of the new organization because AOL has *twice* the market value of Time/Warner even though 80% of the cash flow is expected to come from Time Warner.

Who are Time/Warner? Just read the clip below. This is tremendous power to control the access to information that the world sees and mold world opinion to what they choose and this is supposed to be equal (or half at pre-merger capitalizains) to something that is essentially a "utility" company?

Let me see, when bubble.com bursts, will AOL be even close its current value but the AOL shareholders very shrewdly have converted their funny money into something of real value. Time Warner will still go on producing the cash flow and real market capitalizations based on fundementals will correct AOL's value or to look at it another way Time/Warner's relative value will only increase.

So wheather the TPTB been suckered in or are they tightening their grip we shall see. But from an economics and control point of view it makes no sense for TimeWarner, but then when you're losing the relative market capitalization game (becuase of TPTB tampering in the market to make bubble.com) you'd better make sure that if you're going to give up control of something like Time Warner, you'd better do it now while you can still get away with an equal share of the new company (even though you're market cap is half) rather than later when bubble.com makes you have to settle for a smaller say in the merged companies.

Next up: yahoo and Seagram is my guess.

------------- Following snips are from yesterdays thread The truth or lack of it. What a difference a day makes!

A general forum for serious discussion of events in the news. Reasonable leeway for all points of view will be tolerated but malicious or purposely disruptive posts will be deleted without notice. John Swinton of the NY Times, at his 1953 retirement dinner at the NY Press Club, gave the reason for the need of forums such as this in his following speech: "There is no such thing, at this date of the world's history, as an independent press. You know it and I know it. There is not one of you who dares write your honest opinions, and if you did, you know beforehand that it would never appear in print. I am paid weekly for keeping honest opinions out of the paper I am connected with. Others of you are paid similar salaries for similar things, and any of you who would be so foolish as to write honest opinions would be out on the streets looking for another job. If I allowed my honest opinions to appear in one issue of my paper, before 24 hours my occupation would be gone. The business of a journalist is to destroy the truth; to lie outright; to pervert; to vilify; to fawn at the feet of mammon, and to sell the country for his daily bread. You know it and I know it and what folly is this toasting an independent press. We are the tools and vassals of the rich men behind the scenes. We are the jumping jacks, they pull the strings and we dance. Our talents, our possibilities and our lives are all the property of other men. We are intellectual prostitutes."

(snip)

Today there are nine major corporations dominating the global media (al though, as we shall see, two of the nine are actually controlled by one family). The nine major global media giants today are:

TIME WARNER. The biggest by far, Time Warner, the largest media corporation in terms of annual revenues, is 50 times larger in terms of annual sales than the world's 50th largest media firm.

Once the fiefdom of American media icon Henry Luce, founder of the Time-Life publishing empire, this global media conglomerate is dominated by Edgar Bronfman, president of the World Jewish Congress and heir to the Seagram's Liquor fortune of his late father, ex-bootlegger Sam Bronfman, a top-level figure in the international crime syndicate dominated by the late Meyer Lansky. Admirers and detractors alike have been known to call Bronfman "The King of the World."

The merger in the 1980s of the former "Lucepress" (as it was known in its heyday) with Warner Communications set the stage for expansive growth of this massive worldwide empire, which has more than 200 subsidiaries.

Although Bronfman's Seagram Company did not purchase a controlling interest in Time-Warner until 1993, longtime Bronfman associates had already established themselves in this once eminently American media empire.

(snip)

Considering all of this, it was probably inevitable that the Bronfmans (moving from their organized crime antecedents into the world of "legitimacy") would emerge as key players in the Time Warner empire.

What follows is a representative (al though far from complete) list of the more eminent holdings in the Time Warner octopus:

 Home Video: Time-Life Video; HBO Home Video; Warner Home Video;

 Cable Franchises reaching 11.7 million subscribers;

 Turner Broadcasting, including all of the CNN holdings, including TBS Superstation, CNN International, CNN radio, Head line News;

 Magazines: Time, People, Sports Illustrated, Sports Illustrated for Kids, Life, Fortune, Money, Vibe, In Style, Parenting, Baby Talk, Martha Stewart Living, Sunset, Health, Hippocrates, Asia Week, President, Who, Entertainment Week ly, Cooking Light, Southern Living, DC Comics (50 percent holdings), American Lawyer (83.25 percent holdings) and Dancyu; and,

 Book Publishing: Oxmoor House, Sun set Books, Little, Brown & Co., Time-Life Books, Warner Books, Book-of-the-Month Club.

----------

AOL and Time Warner to Merge

Internet giant America Online (AOL) and media conglomerate Time Warner have announced that they plan to merge.

The deal will combine powerful brands like CNN, Netscape, Warner Bros, CompuServe and Time Magazine in one company.

The two companies said that the "strategic merger of equals" would create a company which will soon have a value of $350bn, making it the largest merger in history.

AOL currently has a market capitalisation of $163.4bn, while Time Warner is valued at $83.3bn. The new firm expects revenues of over $30bn - and 80% of the firms cash flow are expected to come from Time Warner's side of the business.

(snip)

And both companies hope that AOL's huge user base will provide fertile ground for online marketing and e-commerce, i.e. selling Time Warner products like books and CDs. Done deal by end of 2000

AOL's Steve Case will be the chairman of the enlarged group, and Time Warner's Gerald Levin will be chief executive.

Ted Turner, founder of CNN and vice-chairman of Time Warner, will continue in this position at the merged firm.

(snip)

AOL shareholders will hold a majority stake in the merged company of 55%, despite the fact that AOL's value on the stock market is nearly twice that of Time Warner.

-- Interested Spectators (is@the_ring.side), January 10, 2000

Answers

Am I reaching for straws when I read the name Henry Luce and see in it a derivative of a slightly longer name?

-- Jay Urban (Jayho99@aol.com), January 10, 2000.

YES.

Acquaint yourself with the FULL family history.

Night train

-- jes an historic ol footballer (nighttr@in.lane), January 10, 2000.

You've got a good point about the conversion of bubble.com companies into real firms with properties. Although I would think that I'd look for something with a "real" product. AOL had the cash to buy something substantial if they had thought to. Maybe control of GM or such.

But the timing of this merger and several others over the last year or so makes me wonder who's running to whom screaming; "Save us! Save us! Save us from Y2K bankruptcy!"

How many more such "out of the blue" mega-mergers are in store for the next few months? I'll give odds that it's about fifty-fifty conversion of bubble.coms into real properties and the rest being corporate "Save me's!"

WW

-- Wildweasel (vtmldm@epix.net), January 10, 2000.

There are two possibilities...the "New Economy" is real (after all, AOL has been around for a number of years), or it is a bubble.

If it is real, TPTB will be bought out, and will have to try to somehow co opt it.

If it is a bubble, then it gets the Saul Steinberg Treatment. Steinberg in the late '60's bought company after company using bank loans for swing financing with the blessing of Wall Street. Then he tried to buy Chemical Bank. He found that HIS bankers were calling his loans...nothing to do with his credit, just his target. When he stopped his effort, he gave a press statement, a one liner

"I always knew that there was an Establishment, but until today I thought I was part of it!"

My own strictly clueless assessment of the issue is that it is like the first situation...Equity, appreciated stock in an established New Economy company, NOT bank loans, is being used. I would venture that it is REAL! TPTB will have to try to co opt it like they did with another maveric, "Captain Outrageous", aka Ted Turner, a onetime Conservative.

-- K. Stevens (kstevens@ It ALL went away ten days ago .com), January 11, 2000.

The Onion - Only 6 corporations remain.

-- number six (!@!.com), January 11, 2000.

Lol #6! Funny article, but we are so close to that happening that it's getting hard to laugh about it anymore.

-- Hawk (flyin@high.again), January 11, 2000.