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Time Warner Won't Be Broken Up

Posted by: Jon Fine on December 29, 2005

Earlier this month ContextWeb hosted a dinner, at which the main attraction was Vanity Fair columnist Michael Wolff giving a spiel about media.

Allow me to be the 4,679th person to say that Michael, with whom I’m friendly, is an extraordinarily good writer and conversationalist. He delivered—miniumum— half a dozen tossed-off bon mots that you’ve come to expect from him. (One of them, describing traditional media and their online plays: “A business built on a product that’s subsidizing a product that’s putting it out of business.”)

But there was something very 2001- about his remarks. He described himself as “the luckiest man in the Internet business, because I am not in the Internet business.”

This is a very unusual thing to hear in late 2005. Then again Michael is employed by Vanity Fair and Conde Nast Publications, purveyor of luxury-porn in a magazine format. For the longest time, most of its magazines pretty much pretended the Internet didn’t exist, to no apparent ill effect on ad pages or circulation. And, like it or not, luxury-porn is likely the last magazine sector left standing. (Those selling luxury want glossy stock and coffee-table-esque environments; advertising’s not just an eyeballs game for them.)

Wolff also said “the ‘Net is an inherently political medium, the way rock and roll is an inherently political medium,” which is the sort of thing only a baby boomer not particularly serious about rock music can say … um, Black Sabbath? Led Zeppelin? Black Flag and the Replacements and Slayer and the Strokes and the Stooges and White Stripes? Political? Not hardly.

But, whatever, at least until he busts out this about Time Warner: “I think it’s going to be taken over by these pishers—Carl Icahn and Bruce Wasserstein.”

Icahn, who controls around 3% of Time Warner, which right now has a market cap just north of $81 billion. Even if you have Bruce Wasserstein—who, a pal once said, “invented all of this” M&A stuff—and even if you are playing to hedge fund guys who live to make mischief like this … well, how do you get there from here?

The break-up-Time-Warner dream is, still, dearly held by lots of different camps: Bitter ex-employees; failed moguls (Steve Case, we are looking at you); investors and dealmakers. Sometimes those rooting for a break-up want it with the kind of ardency that creates a reality-distortion field. At another party this month, a high-roller investor from overseas told me, with a straight face, that Parsons had just publicly stated that Time Warner should be broken up. If Parsons did, well, not a single media outlet has reported on it. Which is funny, considering how much ink was spilled when Parsons said Time Warner should not be broken up.

Long story short: I bet Michael dinner, in front of a roomful of people, that Time Warner would not be broken up within one year. Immediately afterwards, I realized how much dinner with Michael Wolff could actually cost, should I be wrong.

And, naturally, right after I make this bet, the pre-Christmas business pages are suddenly full of Icahn making noises about Time Warner. Practically every day.

Still: I don’t think I’m wrong.

Time Warner won’t be broken up.



The media world continues to shapeshift as new forms arise and old assumptions erode. On this blog, Bloomberg Businessweek will provide sharp analysis and timely reports on the transformation of this constantly changing terrain.



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