Greenmail Anyone?
Carl Icahn is getting increasingly frustrated with the Time Warner board, and he is not a man to be put off for long. It looks like he'll fight for control of the board in May and, if that doesn't work... well, I must admit I wouldn't mind seeing the threat of corporate raiding putting these entertainment conglomerates' feet to the fire. He owns 2.6% of the shares and the company has made disastrous moves, leaving the stock price stagnant for over three years now.
Granted, it hasn't been a good time for the entertainment sector, what with the internet and all, except that they merged with an internet company... an outdated one... I mean, dial-up? They've tried using AOL as a portal, a brand... it's been slow going because the brand doesn't represent anything relevant to people now.
Then, there's the music division debacle. They sold it to Edgar Bronfman in 2003 and he took it out from under the stodginess of the corporate environment, went online and flexible. They're one of the few bright spots in music, showing an 80% gain, but, that's not doing Time Warner any good.
According to Icahn in his letter to shareholders Tuesday, the bloated structure of the company, including a new $800B building, and their refusal to cut costs, is no longer acceptable and is demanding a buy-back and retention of a bigger share in the cable division they plan to spin off.
While it's the need to address shareholders that in many ways causes the problems, making companies so sensitive to each quarter's performance that they resist taking risks and making changes, I support shareholders pulling their weight and targeting these outrageous boards. These boards are extremely powerful and so often go unchallenged. They have dragged their feet for years in addressing the internet appropriately and providing a rational mode of balancing the need for copyright protection with the need for society to have access to our creative bounty.
They have set themselves at odds with technology and their own consumers, in their insane drive to use the internet to gain more and more control over our mediums and the content they contain... and that they own! In the process, they have left the American and worldwide public confused and skeptical. This was shown last Friday as post-Thanksgiving sales featured a sell-off of CDs such as we have never seen. Wal-Mart alone was selling over 40 titles at $3.44.
I have been pondering that fact for days, and I really think the retailers have been put on notice that the tide is turning. I guess they're the first responders. People want digital entertainment. People bought disks that ruined their computers, they see everything going online, they look at the stacks of expensive plastic disks littering their homes. They are paying over $100./month for internet & cable access, plus Netflix. The $30B boom is ending and they (the retailers) know it. Get on board or jump ship guys, because if your customers and retailers don't get you, your shareholders will.
Granted, it hasn't been a good time for the entertainment sector, what with the internet and all, except that they merged with an internet company... an outdated one... I mean, dial-up? They've tried using AOL as a portal, a brand... it's been slow going because the brand doesn't represent anything relevant to people now.
Then, there's the music division debacle. They sold it to Edgar Bronfman in 2003 and he took it out from under the stodginess of the corporate environment, went online and flexible. They're one of the few bright spots in music, showing an 80% gain, but, that's not doing Time Warner any good.
According to Icahn in his letter to shareholders Tuesday, the bloated structure of the company, including a new $800B building, and their refusal to cut costs, is no longer acceptable and is demanding a buy-back and retention of a bigger share in the cable division they plan to spin off.
While it's the need to address shareholders that in many ways causes the problems, making companies so sensitive to each quarter's performance that they resist taking risks and making changes, I support shareholders pulling their weight and targeting these outrageous boards. These boards are extremely powerful and so often go unchallenged. They have dragged their feet for years in addressing the internet appropriately and providing a rational mode of balancing the need for copyright protection with the need for society to have access to our creative bounty.
They have set themselves at odds with technology and their own consumers, in their insane drive to use the internet to gain more and more control over our mediums and the content they contain... and that they own! In the process, they have left the American and worldwide public confused and skeptical. This was shown last Friday as post-Thanksgiving sales featured a sell-off of CDs such as we have never seen. Wal-Mart alone was selling over 40 titles at $3.44.
I have been pondering that fact for days, and I really think the retailers have been put on notice that the tide is turning. I guess they're the first responders. People want digital entertainment. People bought disks that ruined their computers, they see everything going online, they look at the stacks of expensive plastic disks littering their homes. They are paying over $100./month for internet & cable access, plus Netflix. The $30B boom is ending and they (the retailers) know it. Get on board or jump ship guys, because if your customers and retailers don't get you, your shareholders will.
posted by Intervision at 5:59 AM
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