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Time Warner Shares Could Match Fox’s Offer Without A Deal: Analyst

Time Warner Shares Could Match Fox’s Offer Without A Deal: AnalystTime Warner CEO Jeff Bewkes just won an indirect endorsement for his argument that his shareholders would be better off letting him lead the company instead of accepting a cash and stock offer from Rupert Murdoch. Without a deal, Time Warner shares should hit $95 within a year, and there’s “a credible stand-alone bull case valuation of $105,” Morgan Stanley Research’s Benjamin Swinburne says today. The numbers are important: Time Warner rejected Murdoch’s $85 a share bid, and many analysts say that he could go as high as $105 before choking on the cost. That probably wouldn’t impress shareholders if they believe that they’ll see that price without the risk that would come with such a big deal.

Swinburne’s analysis begins by accepting Bewkes’ forecast that cable and satellite company payments to Time Warner’s Turner networks will grow at double digit rates each year over the next five years. “Given 7 out of the top 10 distributors have already renewed (as of early ’14), we see limited downside risk to [the] guidance,” the analyst says. Those payments now account for 20% of Time Warner revenues.

HBO also could grow subscriptions and revenues by tinkering with its pricing and deals with pay TV distributors. It has about 30M domestic subscribers, but the below-average penetration rates at Time Warner Cable and Dish Network suggest that there are “key opportunities for HBO to drive further revenue-generating subscriber growth.” Along that line, Bloomberg reported today that HBO is considering expanding a test with Comcast, introduced last year, that offers broadband service, basic TV, and HBO … Read More »

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Should Fox Shareholders Hope Murdoch Doesn’t Buy Time Warner?

By | Monday July 28, 2014 @ 8:18am PDT

Should Fox Shareholders Hope Murdoch Doesn’t Buy Time Warner?The risks of a deal are becoming more apparent as 21st Century Fox CEO Rupert Murdoch prepares to sweeten the $80B offer that Time Warner rejected, MoffettNathanson Research’s Michael Nathanson observes in a thought-provoking report this morning. With memories of the AOL Time Warner debacle still fresh in their minds, Time Warner execs won’t accept a non-cash bid “unless it is wildly generous,” the analyst says. He hopes Fox draws the line at $100 a share, up from $85, but notes that Murdoch could go to $105 without losing his company’s investment-grade debt rating. Yet if he prevails at that price, then Fox would have little margin for error. And Nathanson warns that mega-mergers “are more complicated than the simplicity of adding two Excel spreadsheet models together.”

The bottom line is that Fox’s stock “is in purgatory”as long as Murdoch’s interest in Time Warner remains alive. And the legendary dealmaker may not be able to pull it off. “After initially believing that this deal gets done at $100 per share, we have our doubts that it will be done at all,” Nathanson says. Among his concerns:

What’s up with Chase Carey?  The Fox COO is highly regarded on the Street, but his contract expires in mid-2016. Some shareholders “are nervous that this deal — and the value of [Fox's] stock — will fall short of expectations if Chase was to leave.” Read More »

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TCA Postmortem: Consolidation News Framed Press Tour Conversation

By | Friday July 25, 2014 @ 8:48am PDT
Nellie Andreeva

TCA Postmortem: Consolidation News Framed Press Tour ConversationWith the power of fans growing and the influence of TV reviews declining in the age of social media, the once marque summer TCA press tour has been taking a back seat to Comic-Con. Once again, the Los Angeles critics convention served as a warm-up for the San Diego geekfest, with the networks trying to save their noisy announcements for the Con. But what would’ve been another uneventful summer TCA was livened up by two big consolidation stories that broke in the first and second week — 21st Century Fox’s decision to put both the broadcast network and 20th Century Fox TV under the studio’s chairmen and CEOs Dana Walden and Gary Newman, and the company’s (for now unsuccessful) bid to acquire Time Warner.

TCA Logo New (2)The first news, which had been widely expected, was met largely with approval as an inevitable move in an industry where owning content is becoming more and more important. CBS has helped grow CSI into a billion-dollar franchise for the parent company, which owns the show. Compare that with The Big Bang Theory, which CBS developed and nurtured to a blockbuster hit that would make as much as $3 billion — for another company, Warner Bros. TV. Watching how much money it has made for WBTV, with the Chuck Lorre series, and for 20th Century Fox TV, with How I Met Your Mother, the network focused on growing its own syndicatable comedies, recently renewing CBS Studios-produced The Millers for a second season. During CBS’ TCA executive session, chairman Tassler was asked whether ownership played a role in the decision to renew The Millers over two 20th TV freshmen, The Crazy Ones, which drew bigger DVR ratings increases, and Friends with Better Lives, which showed better retention. “We will never ever, ever discriminate based solely on ownership,” Tassler said. “We feel that The Millers has a lot of great story material still imbedded in the DNA of the show.” Read More »

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Does Time Warner Need CBS To Thwart A Fox Takeover?

Does Time Warner Need CBS To Thwart A Fox Takeover?Time Warner CEO Jeff Bewkes has a problem. Fox CEO Rupert Murdoch is preparing to sweeten his offer for the owner of Warner Bros, CNN, and HBO after it rejected an $80B cash-and-stock proposal last month. And Bewkes, who says he wants to keep Time Warner independent, has few takeover defenses. What can he do? Here are a few of the leading options that Time Warner execs and their advisors at Citigroup are weighing.

Corporate And Media Leaders Attend Allen & Company Media And Technology Conf.Combine with CBS: This would make Time Warner toxic for Fox: The FCC would not allow Murdoch to control two of the four biggest networks, and two of the largest TV station groups with overlaps in the nation’s largest markets.

And the business logic of a Time Warner-CBS combination is compelling. CBS chief Les Moonves would like to diversify his company to make it less dependent on domestic TV advertising. (He has already said that he’d like to buy CNN if Fox prevails with Time Warner and puts the news channel on the block.) Moonves also has made it clear that he’d like to play a bigger role in movies — his CBS Films appears to be struggling to figure out its identity. CBS could address these concerns by blending with Time Warner’s cable channels and movie studio.

The chief obstacle is that CBS is controlled by Sumner Redstone, who also owns Viacom. He hasn’t wanted to give up either property, and some bankers believe he’d prefer to … Read More »

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Jon Stewart Launches Kickstarter Campaign To Buy CNN: Video

Jon Stewart Launches Kickstarter Campaign To Buy CNN: VideoBecause Rupert Murdoch wants to buy Time Warner, and journalists have reported Murdoch would sell off Time Warner‘s cable news network CNN, Jon Stewart last night launched a Kickstarter campaign to raise $10 billion in order to buy the network “and do…something with it. Not quite sure what yet.” ”CNN, America’s first 24-hour cable news network, has been terrible for many, many years. Does it have to be that way? Who knows, maybe it does,” The Daily Show host’s campaign explains. “So let’s find out for ourselves! This $10 billion, all-cash bid for CNN would secure control of a massive television network reaching over 100 million homes in the US alone, which we could then use to rebuild a news organization befitting this proud land. Or more likely we’d use it to make a lot more poop jokes. Either way, you get to watch!”

A mere $10 contribution gets your photo in an on-screen “21 box” of  talking heads. For $15,000 it’ll be just you and Carol Costello in a “2 box”, with 5 minutes of freestyling. And for $5 million, CNN will initiate a 24-hour, 2-week hunt for your lost car keys. Watch here:

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Merger-Mania Could Depress Big Media Stocks: Analyst

By | Wednesday July 23, 2014 @ 8:23am PDT

Merger-Mania Could Depress Big Media Stocks: AnalystCowen and Co’s Doug Creutz advises investors today to “call a ‘time out’” on Big Media stocks in a break with the prevailing view on Wall Street that an upcoming round of mergers could help companies, or at least not hurt them. He fears that Fox’s bid for Time Warner will lead to “a land grab for content assets.” And companies that need cash for acquisitions probably won’t continue to repurchase shares and pay big dividends — strategies that have helped to keep investors interested in traditional media. The analyst says he now takes a ”more negative view” of Big Media, and downgraded Fox (to underperform from outperform), Viacom, and Time Warner (both to market perform from outperform). “Historically, this group has been uninvestable when M&A activity has been significant.”

Creutz observes that when Fox CEO Rupert Murdoch has had dealmaking on his mind “the shares of his company have underperformed the market.” And the analyst says he’s “not a believer that a combination with Time Warner would create significant value.”

It’s too risky to bet on traditional media, Creutz says, especially at a time when their stock prices are “near multi-year highs.” The advertising slow down in Q2 “feels like it was a little worse” than previous soft patches. It could become “a more significant negative” if the economy weakens. The pay TV cash cow could be threatened as “new over the top [Internet] distribution appears to be opening the door for insurgent content providers to potentially take market share.” And Creutz notes that the “dismal” … Read More »

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Netflix Says It Sees Little Change If Fox Acquires Time Warner

Netflix Says It Sees Little Change If Fox Acquires Time Warner“Fox and Warner are both pretty powerful companies today. … I don’t know how it changes much if they come together,” Netflix Chief Content Officer Ted Sarandos told analysts today when asked about Rupert Murdoch’s bid for the entertainment giant. The effort probably has “more to do with cable negotiations with sports.” CEO Reed Hastings added that he would offer “no speculation” about what Netflix might do if Fox and Time Warner agreed to merge. “The more we work directly with producers, the less we have to worry with aggregation and big content suppliers.”

Related:
Media Merger Mania: Fox’s Bid For Time Warner Is Just The Beginning
Time Warner Shares Soar On Reports Of $80B Offer By Rupert Murdoch

On other matters: Sarandos talked up Chelsea Handler’s upcoming late-night talk show, saying her focus on entertainment and pop culture will make it “a great representative of the kind of programming on Netflix.” A nightly show makes sense for a company known for binge viewing because viewers are “not watching late-night talk shows the way they used to. They’re watching days weeks and sometimes months later.” The show ”is not instantly perishable content. It’s more perishable, but the economics level that out for us.”

Related: Netflix Touts ‘Orange Is The New Black’ As Q2 Earnings Meet Expectations

Sarandos also says that Netflix will premiere the upcoming AMC series Better Call Saul outside of North America. He talked up the … Read More »

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Time Warner Changes By-Laws To Help Block A Hostile Takeover

By | Monday July 21, 2014 @ 1:50pm PDT

Time Warner Changes By-Laws To Help Block A Hostile TakeoverThis is the first concrete sign that Time Warner is determined to fight Fox CEO Rupert Murdoch if he decides to do an end run around the board in an effort to acquire the company. Directors adopted an amendment to TW’s by-laws, which took effect immediately, that makes it harder for a small group of shareholders to call a Business Leaders Gather For B20 Summit In Sydneyspecial meeting, Time Warner says in an SEC filing. Previously investors holding at least 15% of the total votes could demand a meeting. The change limits that right to “the Chief Executive Officer or a majority of the entire Board.” The fear was that Murdoch — or anyone — could have tried to stampede short-term investors into accepting a deal even if the board concluded that it would not serve their long-term interests.

Related: Bart & Fleming: Fox-TW Mania Means Banker Fees And Layoffs, Not Quality

Time Warner shares are down 1.6% in post-market trading following disclosure of the change. The company says that it intends to restore the 15% threshold at the 2015 annual meeting.

Related: Will Anyone Besides Rupert Murdoch Take A Run At TW?

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Bart & Fleming: Fox-Time Warner Merger Mania Means Banker Fees And Layoffs, Not Quality

By and | Sunday July 20, 2014 @ 9:25am PDT

Bart & Fleming: Fox-Time Warner Merger Mania Means Banker Fees And Layoffs, Not QualityFlemingBartColumn_badge__140510005503Peter Bart and Mike Fleming Jr. worked together for two decades at Daily Variety. In this weekly Sunday column, two old friends get together and grind their axes on the movie business.

Bart: Like  7th grade boys staring in the mirror, corporate CEOs these days keep asking themselves, “Am I big enough?” What scares them is the prospect of becoming a takeover target, and there’s been a rush of takeover talk lately —Rupert Murdoch’s bid for Time Warner being the most dramatic. Size means safety in the corporate universe and Time Warner became vulnerable by ridding itself of Time Inc., AOL and Time Warner Cable — the latter becoming a target for Comcast. With giants like Google, Apple and Amazon looming, CEOs are scared they can’t measure up, but the folks who should really be frightened are the creatives and their audiences. Bigness means giant fees for bankers and profits for shareholders, but the impact of the monoliths is easy to read — a universe of corporate plodding, tentpoles and sequels.

Read More »

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Will Anyone Besides Rupert Murdoch Take A Run At Time Warner?

By | Thursday July 17, 2014 @ 3:49pm PDT

Will Anyone Besides Rupert Murdoch Take A Run At Time Warner?It’s a foregone conclusion now that something big will happen with Time Warner. Its stock wouldn’t be up 20% since yesterday morning — when Fox CEO Rupert Murdoch‘s $80B June offer came to light – if investors thought that Time Warner’s rejection of it was the last word on the matter. Indeed, the stock closed today at $86.12, which means a lot of people are betting that Fox or someone else will top the $85 a share stock-and-cash proposal that Time Warner shunned.

But here’s the problem: Some of Wall Street’s top analysts don’t know who has the desire and wherewithal to wage a bidding war with Fox. If Time Warner seriously wants to escape Murdoch’s embrace, it might have to make a deal of its own — perhaps to buy CBS. Even if it did, “Time Warner would still have to make the argument that more value would be created by merging with CBS than by accepting Fox’s tender offer,” Bernstein Research’s Todd Juenger says.

What about other usual suspects who might covet Time Warner? Comcast and AT&T are out of the running as they pursue their acquisition deals with, respectively, Time Warner Cable and DirecTV. Here are others that might conceivably kick the tires:

Disney: Hard to find anyone who thinks the company will jump in. Disney doesn’t need a big deal, especially with a “clear strategy that should play out over the last two years of Bob Iger’s contract,” MoffettNathanson Research’s Michael Nathanson says. The CEO likes properties that appeal to targeted audiences that he can coax to attend Disney … Read More »

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DeadlineNow: Time Warner’s Rejection Of Rupert Murdoch’s $80B Offer — What’s Next? (Video)

By | Wednesday July 16, 2014 @ 2:49pm PDT
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Time Warner Rejects Rupert Murdoch's $80B Offer

Deadline's David Lieberman weighs in on Time Warner's rejection of Rupert Murdoch's $80B Offer to buy the media giant and where things go from here.

Related:
Media Merger Mania: Fox’s Bid For Time Warner Is Just The Beginning
Time Warner Shares Soar On Reports Of $80B Offer By Rupert Murdoch

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DeadlineNow Morning Report: Fox-Time Warner Tie-Up Talks, Beatles Documentary Film, LA TV Shoots Soar (Video)

By | Wednesday July 16, 2014 @ 12:20pm PDT
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Morning Report, Wednesday July 16

Reports that Rupert Murdoch's 21st Century Fox was kicking the tires on merging with Time Warner merger sends TW stock soaring; Ron Howard to direct a Beatles docu about their 1960s rise; TV production in LA took a massive jump in Q2 2014. Dominic Patten reports.

Related:
Time Warner Shares Soar On Reports Of $80B Offer By Rupert Murdoch
Ron Howard To Helm Authorized Beatles Docu On British Invasion Years
FilmLA: TV Production Soars In Q2 As Features Stay Steady With 2013

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Media Merger Mania: Fox’s Bid For Time Warner Is Just The Beginning (Video)

Media Merger Mania: Fox’s Bid For Time Warner Is Just The Beginning (Video)Rupert Murdoch’s $80B offer for Time Warner makes two things clear: The much anticipated round of content company merger mania is here — and likely will include Time Warner even though it rejected the proposal from Murdoch’s 21st Century Fox. And virtually no deal idea is too big or outlandish. One major question at this point is whether a large digital company such as Google will seize the opportunity to buy a major content company. Giants such as Fox and Time Warner want to defend the pay TV status quo — the lucrative bundle that requires subscribers to buy channels they don’t watch. If they become more powerful, then it could slow efforts by Internet companies to claim a piece of the giant ad pie that goes to TV.

Content company stock prices today reflect their new popularity. In addition to Time Warner (+15.6% at mid-day) we see Discovery +6.6%, Viacom +4.3%, Lionsgate +3.7%, AMC Networks +3.4%, and Scripps Networks +3.4%. “The urgency to find a ‘dance partner” will increase across the sector,” Bernstein Research’s Todd Juenger says. “Nobody wants to be the company that gets left out of the consolidation wave, and companies would rather control their own destinies.” What’s more, every investment banker in the world now smells opportunities to collect millions in fees if they can propose and facilitate deals.

Time Warner has two things that make it especially attractive. Read More »

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UPDATE: Time Warner Shares Soar On Reports Of $80B Offer By Rupert Murdoch

By | Wednesday July 16, 2014 @ 6:46am PDT

UPDATE: Time Warner Shares Soar On Reports Of $80B Offer By Rupert MurdochUPDATE. 6:46 AM: Time Warner confirms that it rejected 21st Century Fox‘s acquisition offer saying its board concluded that remaining independent “will create significantly more value for the Company and its stockholders and is superior to any proposal that Twenty-First Century Fox is in a position to offer.” Fox said it would pay $32.42 in cash plus 1.531 of its own non-voting shares for each Time Warner share. Directors don’t like the plan, in part because it involves “significant risk and uncertainty as to the valuation of Twenty-First Century Fox’s non-voting stock and Twenty-First Century Fox’s ability to govern and manage a combination of the size and scale of Twenty-First Century Fox and Time Warner.” The board also notes that there would be “considerable strategic, operational, and regulatory risks” to a deal.

21stcenturyfox1__131014203730-275x122PREVIOUS, 4:39 AM: Time Warner’s up nearly 20% in pre-market trading after The New York Times and CNBC reported that the media giant recently rejected an $80B takeover proposal by Rupert Murdoch‘s 21st Century Fox. The bid could “put Time Warner in play and might again ignite a reshaping of the media industry,” the Times says. Fox COO Chase Carey met with Time Warner chief Jeff Bewkes in early June offering $85 a share — 40% of it in cash — a 25% premium at the time. The proposal said that the combined companies could save at least $1B by TimeWarnerlogoblueeliminating duplication. Fox, which owns Fox News, offered to sell CNN to avoid antitrust problems, and indicated that it would maintain Time Warner’s studio and cable network operations, as well as most of its best execs, according to the reports. The Time Warner board seriously considered the proposal but rejected it, in part because the offer included nonvoting shares. Nonetheless, “Rupert Murdoch is ‘determined’ to buy Time Warner,” CNBC reports, citing unnamed sources. Murdoch is said to have enlisted Goldman Sachs and Centerview Partners to advise him while Time Warner has Citigroup.

Fox says that it “can confirm that we made a formal proposal to Time Warner last month to combine the two companies. The Time Warner Board of Directors declined to pursue our proposal. We are not currently in any discussions with Time Warner.” Read More »

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Jeff Bewkes Talks Up The Benefits Of Scale Even As Time Warner Shrinks

By | Tuesday July 1, 2014 @ 9:37am PDT

Jeff Bewkes Talks Up The Benefits Of Scale Even As Time Warner ShrinksSize matters in entertainment even for Time Warner, which has offloaded cable systems, Internet services, and — this year –magazine publishing, CEO Jeff Bewkes told an audience today at IESE Business School in New York . Time Warner has “the world’s largest collection of film and TV” and is the No. 1 program supplier to all of the major broadcast networks aside from the networks themselves. As a result, “we have been stable [and] extremely high in our earnings and results every year for the last 10 years.” Returns on capital for TV “are bigger than in theTimeWarner movie business for everybody.” Still, with its slate of about 20 movies a year — about a third of which are big-budget tentpoles, Warner Bros’ “returns in the movie business are bigger, year in and year out, than for our competition.” He says he greenlighted $370M for the Lord Of The Rings trilogy because it was the most efficient way to produce the films, even though it was a bigger risk. Now Warner has “a lot of of movies coming from DC Comics — Wonder Woman, Batman and Superman. … These are going to be highly sophisticated, like Bergman movies,” he said, apparently in jest. He adds that overseas countries account for about half of the studio’s revenues and that should increase due to “huge growth in China and Russia for movies.” Read More »

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DeadlineNow: Who Wants To Buy Univision? (Video)

By | Friday June 13, 2014 @ 1:36pm PDT
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Univision Investors Eyeing Sale

CBS, Time Warner and even Mexico giant Grupo Televisa are on the list of potential suitors for fast-growing Univision, which reportedly is shopping itself around with a $20B asking price. Deadline's David Lieberman reports.

Related: Univision In Deal Talks With CBS And Time Warner: Report

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Univision Investors Engage In Deal Talks With CBS And Time Warner: Report

By | Thursday June 12, 2014 @ 6:29pm PDT
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Univision Investors Eyeing Sale

CBS, Time Warner and even Mexico giant Grupo Televisa are on the list of potential suitors for fast-growing Univision, which reportedly is shopping itself around with a $20B asking price. Deadline's David Lieberman reports.

univisioncomm1Billionaire Haim Saban and several investment companies that paid $13.7B (including $1.4B in debt) for the Spanish-language media company in 2007 want out for at least $20B, the Wall Street Journal says. They’ve reportedly sounded out Time Warner and CBS to see if there’s interest, although the paper says that there’s “no sign any of the preliminary discussions have led anywhere” due to the high price. Other options include taking the company public, or seeing whether the FCC might relax its rules barring foreign entities from owning more than a 25% stake in TV stations — opening the door for Mexico’s Grupo Televisa which owns a small stake in Univision.

Analysts have wondered about Univision’s fate: Its owners include private equity firms Madison Dearborn Partners, Providence Equity Partners, TPG Capital, and Thomas H. Lee Partners — and companies like these usually don’t like to wait much more than five years to see a payoff from their investments. The 2007 acquisition of what was then a publicly traded company was seen as a coup for the group: They paid $36.25 a share, thwarting an effort by the controlling shareholder at the time — secretive former Hollywood agent A. Jerrold Perenchio — to collect $40.  Since then Univision has expanded with multiple cable channels including sports service Univision Deportes, digital properties, and a production studio. Last year revenues increased 7.6% to $2.6B.

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Is Time Warner Planning To Buy A Big Stake In Vice Media?

By | Monday June 9, 2014 @ 3:30pm PDT

Vice logoBritain’s Sky News says that the companies have held “detailed negotiations” that are at an “advanced stage” for a deal that values the upstart news organization at $2.2B. One scenario would have Time Warner — which just spun off its magazine operation — meld its news channel HLN with Vice in return for about half of the combined company. If true, then it would give Time Warner a close relationship with a trendy digital media, TV, and publishing company that has captured the imaginations and financial support of former MTV chief Tom Freston, WME’s Ari Emanuel, WPP, and The Raine Group as well as comedian Bill Maher. 

CEO Shane Smith founded Vice in 1994 as a music magazine; it now offers cutting edge news that critics say too often includes stunts. Supporters and critics feasted last year on Vice’s controversial effort to gain access to North Korea for its documentary series on HBO by arranging an exhibition basketball game featuring Chicago Bulls star Dennis Rodman and some members of the Harlem Globetrotters. 

Last year News Corp (before it split into two companies) paid $70M for 5% of Vice, implying a value of $1.4B for the full company. Rupert Murdoch once tweeted that the company is a “wild, interesting effort to interest millennials who don’t watch or read established media.” 

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Time Inc Shares Slip As Magazine Company Goes Public

By | Monday June 9, 2014 @ 7:53am PDT
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Time Inc Once Again An Independent Company

Deadline's David Lieberman looks at the challenges Time Inc faces as it enters a new chapter as a publicly traded company.

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UPDATE: I want to clarify the situation with Time Warner‘s stock — which is doing better today than my comment below indicates. Although the current price is down from the close on Friday, it’s up if you adjust that number to take out the value of Time Inc. That’s a fair thing to do for an apples-to-apples comparison, and it shows Time Warner shares up about 1% in morning trading.

PREVIOUS, 7:53 AM: Investors gave Time Inc a rude welcome this morning as the legendary magazine operation became a publicly traded company, but didn’t reward Time Warner as it officially became an all movie and TV power. Time Inc shares on the New York Stock Exchange are down 5.5% in early trading from the prices being paid on Friday for the stock on a “when issued” basis. Time Warner is down 3.3%, and touched a 52-week low of $68.15. The entertainment giant’s investors received one share of Time for every eight shares they own in Time Warner.
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