It's appropriate that the first word in Time Warner Inc. is time. Investors in the company need plenty of it.
Except for a brief flirtation above $40 a share in late 1994, Time Warner's stock has muddled along, trading in the 30s for most of the last two years despite a record-setting stock market.
On Thursday, the stock fell 25 cents to $37.625, roughly the same place it was at in March, 1993. Nobody said it would be easy making the biggest media merger in history work.
"Most investors have been frustrated for some time now. They haven't seen any significant returns on their investment," said Harold Vogel, an analyst for Cowen & Co.
That includes Seagram Chairman Edgar M. Bronfman Jr., who spent about $2 billion in late 1993 and early '94 to buy about 15% of a company that is still worth about same amount today.
One reason for the flat stock price is that Time Warner is finding out that unraveling the past is easier said than done.
Chairman Gerald M. Levin is seeking to sell as much as $3 billion in assets to pay down the huge $15-billion debt load stemming from the original Time Inc. and Warner Communications merger. That debt is increasing with two $2-billion-plus cable deals expected to close soon.
Levin also aims to simplify the Byzantine structure of a company that analysts and investors have found maddening to understand, in part by putting some internal distance between the company's cable and telecommunications operations and its high-performing entertainment assets, such as the Warner Bros. studio, Warner Music Group and Home Box Office.
One part of the plan is to jettison Time Warner's investment in Turner Broadcasting System, but that effort is running into roadblocks.
Tele-Communications Inc. this week backed out of negotiations to buy Time Warner's 21% stake in Turner. The spin from the Time Warner camp is that it's just a negotiating ploy by cagey TCI Chief Executive John Malone, who would understandably rather pay $1 billion for the stake than the $1.6 billion Time Warner wants.
Time Warner also has said it plans to sell some cable operations that are not clustered with other Time Warner systems. One recent rumor had the company selling its theme parks, but Wall Street analysts say the company seems committed to keeping those assets.
In fairness, Time Warner's flat stock price reflects some of Wall Street's general bearishness on cable. The federal government has moved toward greater regulation and some feel that cable as a technology could be leapfrogged by systems using small satellite dishes and telephone lines.
Time Warner's answer is that it poses as big a threat to the phone companies as they do to Time Warner. The company is at the forefront of the cable industry's efforts to move into the phone business.
"It's a $90-billion-a-year business. If we got 5% of that business, we could break even on our investment. If we got 15%, there are fantastic returns there," spokesman Edward Adler said.
Time Warner defenders believe the company is getting a bum rap and that, with time, it can readjust itself.
"My sense of it is that investors are a little uncomfortable but far from rebellious. Nobody is calling for (Levin's) head," said one Wall Street executive who closely monitors the company.
That's Hollywood flackery: Sometimes entertainment PR is as entertaining as the stuff it tries to promote.
Take the quote in Thursday's Daily Variety from the firm Baker/Winokur/Ryder, which represents four agents fired by International Creative Management after ICM uncovered their plans to form a competing agency.
"They left for entrepreneurial reasons. They have good relations with ICM. No bridges were burned," quoth the PR firm.
Let's see: ICM is accusing the four of trespassing to steal files, and the four in turn are accusing ICM of defaming them. Both sides are threatening lawsuits.
Sounds like the bridges not only were burned, they were blown to bits.
Then there was the gushy announcement Thursday from Viacom Inc.'s Showtime Networks about an exclusive agreement for the pay-per-view marketing and exhibition of all of former heavyweight champion Mike Tyson's fights over three years.
"Mike Tyson has been and will continue to be a valued member of the Showtime family," said Showtime President Matthew C. Blank. "Our relationship with him extends beyond the confines of the ring. We are excited about his continuing participation as a boxing historian for our live Showtime telecasts. This historic agreement reinforces the network's commitment to offer our subscribers the highest caliber of programming."
No mention anywhere that Tyson just finished serving three years in an Indiana state prison on a rape conviction. (Of course, neither did the MGM Grand Hotel in Las Vegas in announcing an exclusive boxing deal with Tyson.)
Showtime Executive Vice President McAdory Lipscomb, defending the company announcement, said that Tyson has paid his debt to society and has a right to move on to earn a living.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
After moving upward in 1992, Time Warner stock has been stuck trading in the 30s for most of the past two years amid a record-setting period for stocks. It closed at $37.625 on Thursday in trading on the New York Stock Exchange.
Mar. 1995: $37.625