This article focuses on the fallout of the infamous AOL Time Warner merger.  Even though it is a few years after the stock’s precipitous crash, the company is still having great difficulty reviving itself.  Its stock price has stagnated for the past few years, and recently the financier Carl Icahn has been taking a more aggressive position in trying to get the company to divest itself of some assets to begin a large ($20 billion) stock repurchasing plan.  A few months ago, rumor started spreading of a possible sale of AOL (or at least a portion of it) to another company.  The most probably candidates were Google, Comcast, Microsoft, or Yahoo.  This article focuses on the evolution of that process and gives an update that shows just how complicated these industry alliances can be.  It should be noted that this deal would be larger than most joint-ventures that large media conglomerates work on together.

And the march to war continues.  Who is this shareholder activist who regards media assets as nothing more than mere a commodity from which he hopes to realize outsized returns?  Moreover, as a minority shareholder (along with his allies, he has but 2.9% of the common stock), what kind of aplomb must he have in order to (subtlety?) threaten the management of the largest media conglomerate in the word?

This article, published in early November 2005, focuses on the fiscal woes of the large media companies.  Even though many of them were not hemorrhaging money, their stocks had been seriously underperforming: since August, most stock prices were down between 6 to 17 percent at a time when the major indexes had lost only a handful of percentage points.  The main argument is that even though the major media companies (including the conglomerates such as Viacom and the more focused newspaper companies such as Knight Ridder) had been shaking up and revitalizing their business models to prove that they were ready to capture new markets in the evolving economy, many institutional investors were not warning up to their actions and plans.  Indeed, you could even say that there are some corporate civil wars going on in board rooms.  The article specifically mentions that a large shareholder of Knight Ridder wants the company to put itself up for sale, and it makes a reference to Carl Icahn’s efforts to get Time Warner to divest itself of some of its assets to begin a large stock buyback program (since the publication of this article, Carl Icahn has become even more confrontation when dealing with Time Warner’s current board of directors and management).  The writer does not mean to say that all media companies are having trouble, for Google and Apple have been steadily increasing for quite some time (the continue to do so).  Rather investors are not feeling the least bit sanguine when it comes to traditional ‘big’ media companies.  Perhaps they are all just dinosaurs waiting to be extinct.

Here are two interesting and important quotes from the article:

”Beyond those concerns, they worry that with slower advertising growth, the profitability of media properties like television and radio stations could be affected. And even if the ad market were to become robust again, just how many of those dollars might flow to the Internet and away from traditional media is an open question.”

And

''There is a buyers' strike,'' said Dennis Leibowitz, general partner at Act II Partners, a media hedge fund. ''People are afraid to touch the old media. No matter how cheap they have gotten, people are fleeing. The environment is scaring them, and they can't figure it out.''

Required reading for anyone following the current battle between financier Carl Icahn and Time Warner.  This article focuses on Icahn’s growing arsenal of financial weapons, namely a very prominent and prestigious investment bank, Lazard which is now his allay in getting Time Warner to change its ways to dramatically increase its share price.  The problem, of course, is that corporate raiders such as Icahn want to turn a quick profit, whereas the management might be more interested in pursuing a long term strategy, which is a leitmotif of this entire saga.

This article gives more information on the impending Knight Ridder auction (sale) and what that might portend for the newspaper industry as a whole.  According to the article, “the newspaper industry is on the defensive, with circulation stagnant, advertising dollars migrating to the Internet and newsrooms reducing their work forces to save costs,” and thus seeing what desire there is to purchase the nation’s second largest newspaper company in terms of circulation could give a good idea of how Wall Street and investors are feeling about this medium.  The article also points out that even with all these problems, in terms of net margins, newspapers are one of the most profitable industries in the entire economy.  Why, then, all the worry?  Simply because they are seen as having reached their summit and that they are now on their way out, even if they are impressively profitable today.  There has been a decline in their revenues and profits, and thus many regard them as “on their way out.”  That is, few investors want to put their money into an industry that will eventually wither away, even if it is currently performing well.

This article gives more information on the march to war within the Icahn camp as they seek to dramatically alter Time Warner’s current plans for increasing shareholder value.  Specifically, this article focuses on Robert Clark who is a director of both Time Warner and Lazard, the investment bank that is advising Icahn and his team of investors.