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Technology Stocks : What about old Time Warner -- Ignore unavailable to you. Want to Upgrade?

To: John Carragher who wrote (29)	3/30/1999 7:55:00 AM
From: John Carragher	Read Replies (1) \| Respond to of 102

March 30, 1999 Time Warner Weighs Public Offer Of Some of Its Internet Holdings By EBEN SHAPIRO Staff Reporter of THE WALL STREET JOURNAL Time Warner Inc. is joining the ranks of big media companies weighing a plan to turn some of its Internet holdings into a separate public company. The strategy has been the subject of considerable internal debate, and an offering isn't imminent, company officials said. But Time Warner Chairman Gerald Levin addressed the issue of a possible stock offering on the company's own CNNfn business-news cable network last week. Speaking of the Web operations (cnnfn.com), he said, "At some point, there may be opportunities for a public piece of paper." Monday, the company's chief financial officer, Richard Bressler, played down Mr. Levin's comments, and said an Internet stock offering "is not being actively considered right now." He said that before any offering would be considered, Time Warner would first build several "vertical portals," far-reaching Web sites that take advantage of the company's abundance of content. CNNfn.com and Road Runner But people inside the company said CNNfn.com itself is considered the site most suitable for a public offering. Time Warner executives are also considering an offering pegged to its stake in Road Runner, a high-speed Internet service, the company insiders said. Analysts say both operations are evidence that Time Warner is finally starting to move in the right direction after spending years and tens of millions of dollars on its Pathfinder service (www.pathfinder.com), which never developed into a viable business. Merrill Lynch & Co. analyst Jessica Reif Cohen expects Time Warner to contribute its music-retailing assets, which include 50% of Columbia House record club, into a "new music online retailer, thereby creating a publicly traded vehicle, which we view as a strategic imperative." Time Warner insiders say that CNNfn.com is profitable, a rarity for an Internet business and a factor that would add considerable allure to any offering. The Web site has annual revenue of about $25 million and profit of $5 million, according to Time Warner executives. Time Warner internally values the business at more than $2 billion, using the recent public offering of MarketWatch.com, an online financial-news service, as a baseline. MarketWatch, after its first day of trading in January, had a market capitalization of more than $1 billion. CNNfn staffers are racing to expand the site, adding key features such as e-mail and a powerful search engine. Lou Dobbs, president of CNN financial news, confirmed that a far more extensive site will be introduced in 60 days. Rivals' Strategy Mr. Dobbs, in addition to being the anchor of CNNfn's lead newscast, has emerged as one of the most active new-media executives inside Time Warner, based on the success of the financial site. Mr. Dobbs bristles at criticism of Time Warner's Internet strategy and says, "The world does not need another Yahoo!" Mr. Dobbs is referring to the strategy of Walt Disney Co. and General Electric Co.'s NBC unit, both of which have linked themselves to Internet portals, the Web sites that serve as the point of departure for Web surfers. Mr. Dobbs argues that it makes far more sense for Time Warner to develop the content-rich vertical portals that take advantage of the company's tremendous store of content produced by the people at Time Inc., Warner Bros. movie studio and CNN. Mr. Dobbs declined to discuss the issue of a public offering. Figuring out how to sell and distribute products over the Internet has become Mr. Levin's overriding concern these days, according to Time Warner executives. But in new-media circles, some executives say Time Warner has been slow to capitalize on the Internet compared with rivals Disney and NBC. In recent weeks, Time Warner's internal Web-development efforts have accelerated as various divisions are racing to beef up their Web sites. Time Warner just launched Entertaindom, a Warner Bros. site (Entertaindom.com), and it is planning a news site. Time Warner weighed investments in Internet portals Lycos Inc. and Compaq Computer Corp.'s AltaVista, but rejected them as too expensive, given the current astronomical prices Internet companies are commanding. Mr. Levin has said repeatedly that Time Warner isn't interested in big acquisitions. In considering an Internet-stock offering, Time Warner is following in the path of CBS Corp., which elicited a favorable buzz by announcing that it is considering selling to the public a portion of its Web assets, including its stakes in MarketWatch.com and SportsLine USA Inc. NBC is pursuing a similar strategy.