If you look into what the $6bb represents, how it is likely to be repaid, and what the overall relationship will end up resulting in....it isn't what the general media have made it out to be.
It isn't really $6bb in cash. What alot of people are going to find out is that this deal isn't as bad as it is being made out to be.
In addition, there is no evidence that AOL would have been priced as low as you think 18 months later. Much less, yes, but TW would ALSO have been worth much, much less. TW was the company with major problems prior to the merger, none of which have been solved yet.
AOL, even IF you assume that $6bb is real cash outflow, would have been in great shape without TW today. Clearly still having problems, but not as bad as the average online company.
BTW, one thing worth noting about the intracompany transfers I mentioned....MSN last year earned about 1/2 its revenues promoting the new Windows. Considering that TW is assumed to have 1/3 from intracompany transfers, what does that say about MSN's viability?
Fact is, even MSFT's deep pockets haven't turned THAT into a viable product.
AOL remains THE profit center for TW. Why do you think WS is beating the combined company so badly? Not because it is a loss center, but because it isn't earning AS MUCH as they were supposed to. |
