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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Ibexx who wrote (38426)	2/2/2000 8:34:00 PM
From: puborectalis	Read Replies (2) \| Respond to of 41369

Time Warner Chief Defends AOL Deal (02/02/00, 6:48 p.m. ET) By Reuters NEW YORK, -- Media group Time Warner, the home of CNN as well asBugs Bunny, said Wednesday that despite a 16 percent slump in America Online stock, it was not getting cold feet about merging with the Internet company. "I am convinced the deal structure is appropriate for shareholders of Time Warner and for shareholders of AOL," Time Warner chairman and CEO Gerald Levin told reporters. Pressed on whether the decline of America Online's stock from $71 on Jan 10 -- when the deal was announced -- to $60 Wednesday, might force him to reconsider the merger, Levin said: "There is lots of trading activity going on and there are always forces at work, but I believe trading activity in the [AOL] stock is not representative of the power of AOL-Time Warner." "The value is there and I try not to have emotional highs and lows -- but I do watch it every day!" said Levin. Levin will become CEO of the new company, which will combine Time Warner's traditional media, such as Time and People magazines, the Warner Bros. movie studios, broadcast TV's WB Network and cable channels, with AOL's Internet presence and reach. The stock deal between the two companies, which requires regulatory and shareholder approval, was valued at $160 billion on Jan. 10, but is less now that AOL stock has declined 16 percent since the announcement. The merger is expected to close in the fourth quarter of this year. By comparison, Time Warner shares immediately rose on the New York Stock Exchange from $64.75 to $90.06 when the AOL deal was announced. It has fluctuated recently, but was up over $7 at $85 by the close Wednesday, when the company announced strong fourth-quarter earnings that beat Wall Street estimates. Briefing a group of reporters on the results, Levin sought to justify the AOL deal. "Time Warner alone? AOL alone? Where would they be going in the 21st Century? he said. "It is crystal clear to me that the companies have an advantage being together and the market will reflect that." In an earlier presentation to Wall Street analysts, Levin expressed confidence in the growth potential of AOL-Time Warner, pointing out that no other company would have such diverse "revenue levers" or the flexibility to use them in ways that maximize growth. He was comfortable with projected EBITDA (earnings before interest, taxes, depreciation, and amortization) growth of around 30 percent for 2001 over 2000, representing more than $11 billion in EBITDA for 2001. AOL-Time Warner will have three primary revenue drivers: subscriptions, advertising, and commerce and content. AOL and Time Warner will act as catalysts on each other's businesses, creating new growth opportunities by taking advantage of "cross-promotion, brand value, and scale." Levin said the "monetizable footprint" of AOL-Time Warner's subscription businesses was unmatched, with more than 100 million paying subscribers. In addition, he said AOL-Time Warner's services and content would "touch" consumers more than 2.5 billion times per month.