Jane Martinson chats with Time Warner chairman and CEO Dick Parson ... among the bits of interest: TW did look at acquiring YouTube, MySpace or About.com but balked at the asking prices, Parsons said. The company has looked at everything that came along. Parsons: “We have a certain financial discipline. No one right now can say how you get a return on investment from YouTube. They have very little revenues and no earnings.” The company had to make a judgment on how to get value out of an acquisition of that size, and obviously decided it couldn’t be done.
- On any possible sales of Time Inc and AOL in the US, Parsons said: “You never say never, but we have no current plans. I wouldn’t anticipate a change of mind by the end of the year.” He said that the flux of the media space is a good reason to keep parts of the business that unite different content formats and different distribution methods, namely online and cable. “We are evolving to a place where nobody knows what the endgame will be. If we’re playing at every stage along the value chain, every time it rains we’ve got a bucket and we’re gonna catch some of that value.”
- Asked about the much-heralded synergies of the merged companies, Parsons said: “We oversold the notion of synergy. These businesses are too distinct and discrete to manage that way.”
- He expects that Time Warner’s core cable business, which is likely to be listed soon, and a re-invigorated AOL will grow earnings to double digits, though he admits AOL is still in the doghouse as the “poster child for the dot com collapse”.
- Few takeovers work and he cites just two recent deals that he thinks were successful: Murdoch/MySpace and Time Warner’s $435 million acquisition of Advertising.com that now makes up 20 percent of AOL’s ad revenues.
“We oversold the notion of synergy. These businesses are too distinct and discrete to manage that way.”
Related: Sales Over, AOL Implementing New European Ad-based Strategy