7. Time Warner Inc.
Revenues 2014: $ 27.359 billion (€ 20.594 billion)
The US-American media company Time Warner is the result of numerous mergers. The company's cornerstones are the Time publisher and the Warner studios – as the name of the company would suggest. Other companies such as the film production company New Line Cinema and the television divisions HBO and Turner Broadcasting System are also part of the former largest media company in the world. In 2009, Time Warner pushed off the cable network provider Time Warner Cable Inc. and put an end to the unsuccessful merger with AOL. The market leader started to shrink.
1 Time Warner Center, New York, NY 10019, USA
Branches: Film, television, licensing, publishing, online
Legal form: Public Company (since 1971)
Financial year: 01/01 - 12/31
Founding year: 1922 (Time Inc.), 1923 (Warner Bros.)
|Revenues ($ Mio.)||28,118||27,359||29,795||28,729|
|Net income(loss) ($ Mio)*||6,865||5,975||6,599||6,126||5,864||5,400||4,618||(13,402)||4,387||6,600||2,905|
|Share price (in $, end of year)||64,67||85,06||69,72||37,83||35.89||31.97||28.13||9.98||16.51||21.93||17.44|
- Jeffrey L. Bewkes, Chairman, Chief Executive Officer
- Howard M. Averill, Executive Vice President & Chief Financial Officer
- Paul T. Cappuccio, Executive Vice President & General Counsel
- Olaf Olafsson, Executive Vice President , International and Corporate Strategy
- Carol A. Melton, Executive Vice President, Global Public Policy
- Gray L. Ginsberg, Executive Vice President, Corporate Marketing and Communications
- Karen Magee, Executive Vice President, Global Public Policy
- John Martin, CEO, Turner Broadcasting System
- Kevin Tsujihara, CEO, Warner Bros. Entertainment
- Richard Plepler, CEO, HBO
Board of Directors
- Jeffrey L. Bewkes, Chairman and Chief Executive Officer, Time Warner Inc.
- James L. Barksdale, Chairman and President, Barksdale Management Corporation
- William P. Barr, Former Attorney Gerneral of the United States
- Stephen F. Bollenbach, Former Co-Chairman and Chief Executive Officer, Hilton Hotels Corp.
- Robert C. Clark, Distinguished Service Professor, Harvard University
- Mathias Döpfner, CEO and Chairman Axel Springer AG
- Jessica P. Einhorn, Dekanin Paul H. Nitze School of Advanced International Studies (SAIS), Johns Hopkins University
- Carlos M. Gutierrez, Albright Stonebridge Group
- Fred Hassan, Managing Director Healthcare bei Warburg Pincus
- Kenneth J. Novack, Senior Counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC
- Paul D. Wachter, CEO Main Street Advisors
- Deborah C. Wright, Chairman, President and Chief Executive Officer, Carver Bancorp, Inc. und Carver Federal Savings Bank
Time Inc. was founded in 1922. The founders, Henry Luce and Briton Hadden were only 25 years of age at the time. The school buddies and later fellow students in Yale had entertained the idea of publishing a weekly news magazine for quite a while. They sought to collect 100.000 US-Dollars from investors in order to realize this revolutionary idea. Yet, they had to make do with 86.000 US-Dollars in the end, which they managed to scrape together from 72 investors. On the 3rd of March 1923, the first issue of Time hit the shops. The success was enormous. It did not take long before further magazine titles followed: The photo-illustrated Life, economy magazine Fortune and the boulevard magazine People. After the Second World War, Time Inc. was not only the largest magazine publisher in the USA, but also in the world. Passionate writing instead of sober style was the journalistic credo of the magazines. When the publisher Luce was criticised once more in regards to the lack of objectivity in his magazines, he responded: “We tell of the truth as we see it”
The Filmstudio Warner Brothers launched in 1923, just a year after the Time publishing house. Despite the proximity in time, the circumstances could not have been any more different. Time Inc. was created in New York City, the cortex of the US-economy elite. Its young founders were strongly intertwined with the establishment. Warner Brothers on the other hand opened its gates in a backwater suburb of Los Angeles, not sporting a lot of features apart from an abundance of sunshine: Hollywood. The sons of Polish immigrants, four brothers Harry, Albert, Jack and Sam Warner did not benefit of an university education. Fascinated by the magic of film – still in black & white and silent back in the day – they rented cheap offices on the Sunset Boulevard, from where they would a produce their first works of celluloid. The early steps were the hardest, but they managed to take them nonetheless in 1927, when 'The Jazz Singer' turned out to be a great success. It was the first talkie in the history of film. Initially, Jack Warner doubted the likelihood of success. “Who wants to see a film in which people actually talk?”, had been his initial reaction when confronted with the potential project. He and his brothers still decided to produce 'The Jazz Singer' and they would not regret it ever.
With the profits they could acquire a large estate in Burbank, just north of Hollywood and finally operate a proper film studio right there. The estate is still featured in the Warner Brothers Film intro to this day. Unlike Metro-Goldwyn-Mayer , Warner Brothers did not focus on glamorous monumental films, but on less risky productions, first and foremost gangster films and romance. It might have resulted in less exciting headlines, but generated healthy business reports. Furthermore, there was also the odd surprise hit too, such as Casablanca (1942) or The Exorcist (1973). In the 1950s and 1960s, Warner extended its business through the production of television and records.
In 1969, the CEO of Kinney National Service, Steven Ross, bought Warner Brothers for 400 million US-Dollars. Two years later, the merger was renamed into Warner Communications and Steven Ross inaugurated a new era with his company policies. Hence, Tim Wu calls him the 'first example of a new archetype of the big media tycoon' in 'The Master Switch'. He was considered a model for other companies and entrepreneurs such as Disney's Michael Eisner or Barry Diller (Paramount). The first media conglomerate in the 1980s included DC Comics, the Mad Magazine, video game designer Atari and the football team New York Cosmos on top of the Warner Bros Film studio. The integration of these various companies was supposed to generate a synergy effect.
In 1989, more than sixty years after its initial founding, the acting bosses of Warner and Time decided to merge their companies. They were driven by the idea of economic advantages of combining as many media divisions under one roof as possible. The concept of the so-called 'integrated media company' was born and it would inspire many more mergers in the industry for years. Despite the fact that it had not become apparent how the planned interplay between film, music and print actually works, even seven years after the merger, the head of the company at the time - Gerald Levin - decided to close another billion Dollar deal. He bought the CNN-Group in 1996, which included the news channel of the same name plus special interest channels such as TNN and TNT as well as a large film depository from Ted Turner for 8.5 billion Dollars in shares. Turner, who was rumoured to have a manic-depressive personality due to his very strong mood swings, started the first channel that would show news around the clock in Atlanta 1979. Initially, the channel was mocked and dubbed the 'Chicken Noodle Network' due to the constant mispronunciations of its young correspondents, Turner's 'Cable News Network' became the worldwide authority on news within a few years. The crux of the whole affair: It also worked as a business model. Not previously blessed with high profits at all, the genre of TV-news filled the pockets of Turner.
On the 10th of January 2000, the world learned that Levin still had not quenched his thirst with the acquisition of CNN. The manager surprised the public when he announced that Time Warner would merge with the Internet provider AOL. The world's largest operator of traditional 'old' media merged with the successful major player in all things digital 'new' media. Dazed by the Internet fever on the stock market, the world still celebrated the merger as a milestone of the final transformation from an old to a new economy. The fact that, according to the merger conditions, the AOL shareholders would hold 55 percent of the shared giant 'AOL Time Warner', despite the circumstance that Time Warner and its 27,3 billion Dollar revenue had been nine times larger than AOL (Revenue: 3,1 billion Dollars) and even generated twice as much profit (1,95 billion Dollars compared to 762 million Dollars), was not deemed an unfair deal at the time. As far as the evaluation by the stock market was concerned, the AOL-shareholders could have demanded as much as 70 percent.
The Warner Music Group (WMG), one of the four largest record companies in the world, was sold by Time Warner to an investor group led by Edgar Bronfman Jr. in February 2004. Haim Saban, who is quite well know in Germany too, is also involved in WMG. The main offices of the Warner Music Group Germany Holding GmbH are located in Hamburg.
Following the split with Warner Music , another company division was taken over by the French media group Lagardère for 237,5 million Dollars in February 2006: The Time Warner Book Group which had been for sale since 2003. Through this acquisition, Lagardere became the third largest publisher in the world. In 2003, a deal with the Bertelsmann AG fell through shortly before its closing. The Time Warner publishing division increased its advertising takings and parted with the weak Time-Life direct marketing business.
The merger between old (Time Warner) and new media (AOL) still did not bear the desired fruits, because the company failed to create meaningful and efficient synergies. Jeff Bewkes therefore ordered the online-company to think about a radical re-orientation. Hence, AOL-boss Jonathan Miller sold a 5 percent share package of AOL to the competitor and search-engine giant Google for 1 billion Dollars in March 2006, hoping to find more AOL content in Google search results in the future. Miller also sold the Internet access business of AOL Germany to the Telekom Italia and its Hamburg subsidiary HanseNet for 675 million Euro in September 2006. Just a short while later, Time Warner parted with its AOL Internet access business in France for 365 million Dollars and the British Carphone Warehouse Group bought the Internet access business of AOL if Great Britain in October 2006 for 370 million Pounds (548 million Euro). By selling the access businesses in Germany, France and Great Britain for the price of about 1,9 billion US Dollar, the formerly problematic division AOL increased its operative revenues by 38 percent to 397 million US-Dollar. Since 2006, AOL is an ad-financed Internet gateway with news, classifieds and software applications, which also provides a context-search based on the search technology of Surphace (Sphere until October 2009).
In March 2006, Time Warner launched its In2TV product (Now: AolTV) through the AOL gateway website, through which the user could access and watch TV-series classics by the Warner Studios (for example Two and a half men, Kotter or Beetlejuice). For this, the company relied on advertising revenue instead of download fees. For every 30 minutes of film, up to two minutes of ads are shown. On top of that, the website can carry adverts itself.
In July 2006, Time Warner bought back the Google share of 5 percent, which Google bought in 2005 for approximately 1 billion US-Dollar, to bring the shares to the stock market. Google had no chance other than accepting the deal, although it is very likely that they received less for the shares than they initially paid for it. In the last quarter of 2008, Google had to write off 726 million Dollars on the value of its AOL-shares.
It did not take long for the Internet-bubble on the stock market to blow up and with it all the market euphoria. AOL Time Warner plunged into a severe crisis. Levin stepped down as CEO in June 2002 and AOL founder Steve Case had to vacate his position as chairman one year later. The new tough guy in the company was Richard 'Dick' Parsons, a man from the Time Warner family himself. Parsons urged to refocus on the values of the 'old' media world. He managed to sanitize the heavily damaged company and put it back on the growth track. In Autumn 2003, he made away with the three letters 'AOL' in the company name. Time Warner was once again Time Warner. By the end of 2009, after eight years, Time Warner Inc. finally pushed of its Internet division AOL. The Internet division was split off the company and traded as independent company on the next stock market business day. The man behind the restructuring and who is in charge of making AOL attractive for the stock market, has been Tim Armstrong since 2009, former Google-manager. As far as Europe was concerned, the company already parted with its AOL-business with Internet accesses long before. Hence, the merger of two companies that has resulted in record losses for the shareholders was annulled.
In the following years, the focus on operating a pure media company (deconstruction) resulted in pushing off Time Warner's cable company Time Warner Cable. In March 2009, the separation, which had been planned since 2005, commenced and the shares of 85 percent (9,25 billion US-Dollar) sold to the shareholders at the time.
Jeffrey Bewkes took over the position of the former company head Richard Parsons on the 1st of January 2008, five months before Parsons' contract would officially end. Wall Street considered Bewkes to be a man of action, who could split Time Warner and revive the share price after a long period of drought. The Financial Times called Bewkes a 'Pioneer of the entertainment industry', because he turned HBO, the CEO of which he had been since 1995, into 'one of the world's most profitable television companies'.
Film and Entertainment
The Time Warner film and entertainment business, comprised of Warner Bros., New Line Cinema and DC Entertainment generates constant and good revenues. The one-billion-Dollar mark has been breached by the Warner Bros Picture Group for ten years in a row. Some of the smash hits were New Line's 'Lord of the Rings' trilogy as well as other blockbusters such as 'Inception' or 'Clash of the Titans'. In order to save money, the Time Warner Hollywood studio New Line Cinema was integrated into the larger company division Warner Bros. Entertainment Studio.
The most profitable divisions of the company are HBO and Turner Broadcasting Systems (TBS) with CNN, TNT and the Cartoon Network. TNT has become one of the most viewed and recognized cable channels in the USA and the relaunch of the TBS superstation as a comedy platform was also a success. Turner and its rich portfolio, which include digital content, is active in more than 200 states.
The very successful channel HBO is not financed through advertising, but subscription revenues. The station group, which now includes 10 digital channels, is considered the cash cow of the Time Warner conglomerate. In the business year 2011, HBO and Turner Broadcasting together generated revenues of 13,65 billion US-Dollar - nearly half of total revenues. From very early on, HBO relied on a very elaborate in-house production strategy, which is regarded with a humble lowliness by the rest of the industry. As of today, high-quality in-house productions make up a third of the air time. It is paramount to retain this standard so the number of subscribers remains constant.
Time Warner's oldest commodity, Time Inc, is the number one amongst all US-American magazine publishers, according to the company statistics, and its portfolio currently holds 95 titles. Time Inc. publishes magazines such as"People", "Fortune" or "Sports Illustrated". The decreasing advertising revenues as a result of the financial crisis not only led to making 600 positions redundant (six percent of all Time-employees) but also a more centralized strategy as far as the various magazine titles' managements are concerned.
Time Warner, NBC-Universal, Bertelsmann, the venture capital companies Rustic Canyon, Trinity and dcp as well as Hewlett Packard as strategic partner got together to support the Trion World Network (since 2010 Trion Worlds) game design studio, which was founded in September 2006, with a million Dollars sum in the two-digit range. The company was created by Lars Buttler, Might & Magic inventor Jon Van Caneghem and other industry veterans and is dedicated to the development of online games (so-called MMOs – Massive Multiplayer Online) that are played over the Internet, paragons of which are 'World of Warcraft' and its expansions 'The Burning Crusade', 'Wrath of the Lich King' and 'Cataclysm'.
the Open Society Foundations' Media Program,
Germany's Federal Agency for Civic Education,
the Rudolf Augstein Foundation,
the city of Cologne, Germany,
and the State of Thuringia, Department of Commerce.