TW'S bottom-line workout
On Monday, the company announced a plan to effectively sell off the 14% stake it owns in toymaker Hasbro Inc., by offering $ 1.55 billion of zero coupon notes which are exchangeable into shares of Hasbro (Daily Variety, Dec. 8). The offering, which is being made through Merrill Lynch, could yield Time Warner as much as $ 500 million.
Speaking to analysts at the PaineWebber Media conference here yesterday, TW senior VP Geoffrey Holmes said the company plans to "monetize," or turn into cash generators, its other non-earning assets over the next few years.
Those include a 21% ($ 2.5 billion) stake in Turner Broadcasting System; 37.5 % of publisher Whittle Communications; 50% of theme parks operator Six Flags; and ownership stakes in cable programmers Black Entertainment Television, Comedy Central, E! Entertainment Television and home shopping channel QVC.
Because the holdings represent minority stakes they do not currently contribute to profits or losses.
While Holmes would not get specific about the ways the company would accomplish its goal, he pointed to Hasbro, the pending sale of its stake in the Mile High Cable partnership to Tele-Communications Inc. and sales in the open market as examples of possibilities.
"There are all sorts of ways to monetize assets, we're just trying to get the message out that we are indeed going to do this," Holmes said to reporters after the presentation. "We think that the $ 3 billion in assets, which represents about $ 8 per share of Time Warner's common stock, is something the marketplace doesn't recognize or appreciate." Time Warner closed up 1/4 yesterday at $ 285/8 a share.
Some analysts attending the conference were dubious. "They may be willing to get rid of Hasbro," said one who wished not to be identified. "But what are they going to do about a strategic asset like Turner? They've already tried to buy it and they certainly aren't going to sell it."
