In a somewhat circuitous route, Time Warner Cable, the second-largest cable TV operator in the US, has been partially spun out and will begin trading on the New York Stock Exchange as early as March 1. In July the financially troubled cableco Adelphia sold the majority of its cable properties to Comcast, the largest cableco, and Time Warner for some $17 billion – about $12.5 billion in cash and a 16% interest (156 million shares) in Time Warner Cable.
Under Adelphia’s Chapter 11 bankruptcy plan, most of the Time Warner Cable shares will be distributed to Adelphia stockholders who will be able to trade the shares on the Exchange.
Time Warner says it won’t sell any of the 84% it now owns in Time Warner Cable because of tax liabilities, at least not at this point. Time Warner Cable has fared well financially because of its growth in broadband, digital television and, most recently, digital telephone service.
Separately Time Warner, after over a year of negotiations, sold off the Atlanta Braves Major League Baseball team to Liberty Media, which also got $1 billion in cash and certain Time publications as part of the transaction. To make the baseball franchise saleable, Time Warner had cut back the team’s payroll, causing the Braves to not win their division race last year for the first time in 15 years.
Liberty Media paid over one-third of the shares it owned in Time Warner – 60 million of its 171 million shares. That reduces Liberty Media’s ownership of Time Warner from 4% to 2.6%. Liberty also got Leisure Arts, Time’s craft magazines, which are valued at $22 million.
Ted Turner bought (in 1976 for $12 million) and used the Atlanta Braves to help build up Turner Enterprises, another example of sports being used to build a media empire. The company’s WTBS (nee WTCG) TV station was the first to use cable TV to air a baseball team’s games nationwide – an unthinkable and almost daily intrusion into the geographical markets of other baseball teams.
He also started and built up CNN and other cable TV networks plus acquired several then seemingly worthless libraries of classic Hollywood films. Turner then sold it all to Time Warner, making him one of the world’s wealthiest men. Unfortunately, then-Time Warner chairman Gerald Levin talked Turner and other Time Warner shareholders into merging with AOL. The result was that the value of the shares that Turner held plummeted, costing him billions.
Liberty Media, which some weeks back acquired control of DirecTV from News Corp (why own a satellite TV service when you can use the Net to deliver your entertainment?), also acquired this week a TV station from CBS as part of a $170 million stock buyback by CBS.
The media scene – it is “a changing” and the Internet is sure to force more disruptions.