Is Warner Running Out Of TIme?

With the announcement last week that News Corp.(NWSA) would be spinning off its publishing business, analysts

Warner Communications

have been looking for copycat transactions to propose.  It was inevitable that some of them would turn their attention to Time Warner(TWX), and, indeed Jeanine Poggi reports at AdAge that

Pivotal Research analyst Brian Wieser renewed the calls for a Time Inc. spin-off. Such a move would “represent a continuation of broader industry de-consolidation among many of the industry’s former conglomerates paired with specialization focused on video,” he wrote. “With that de-consolidation, much of the industry has now approached a point where a meaningful number of companies have a broadly similar focus on video production, programming and packaging.”

A spin off of Time, Inc. would undo its 1989 merger with Warner Communications by Steve Ross, immortalized in Master Of The Game.  The deal, one of the most iconic of the legendary deal-making 1980s, was the final transformation of a company that began as some Manhattan funeral parlors owned by Ross’s father-in-law.  Gerald Levin, Ross’s lieutenant was a driving force behind the deal, which became contested when Paramount forced a bidding war.  Levin, who would take over the company three years later on Ross’s death, went on to architect the disastrous AOL(AOL) deal, which itself ended with the spinoff of AOL as a once again independent company.

There’s also a Rupert Murdoch connection as Murdoch attempted a hostile takeover of Warner Communications in 1983 which Ross thwarted by accepting a white knight investment.

Though it wouldn’t be shocking if it were to happen, Poggi aptly notes that Time Warner is in a very different situation from News Corp.  News is spinning its publishing business as it is under a huge cloud from a series of phone hacking scandals. Time Warner’s magazine business, has fared better than the newspaper-heavy business at News Corp, and has just begun a new plan under new leadership. The company might well want to see some indication of the plan’s success before setting the division loose.

Disclosure: The author owns no position in any stock mentioned