New York (NY) – It appears Time Warner is going through some major shake ups these days, first with Viacom, and now reportedly with CBS. Although their partnership with AOL seems to be one of tough love, or possibly “tough to love,” that may not be the end of their woes.
Time Warner has struggled in the past due to AOL and its having to take over $100 billion in write-downs due to its steadily declining value.
The latest issue between the two companies came last Wednesday when Time Warner had to write down an additional $25 billion to reflect AOL’s latest decline in value. This came simultaneous to news that Time Inc, the subsidiary that publishes Time, Sports Illustrated, and Fortune magazines, is crumbling – thus bringing in lower earnings than the company expected.
It seems that Time Warner was not prepared for a downward spiraling economy. Originally, Bewkes – Time Warner’s CEO – stated that he was confident in the company and felt that it was resilient and could continue.
Time Warner is now warning that the company might not be as resilient as once believed. Not producing the ad revenue they need to survive is many in the company nervous. They now believe Time Warner will actually be posting an operating loss for 2008, rather than an operating income.
Time Warner will have to find a way to make money via AOL and the magazine side of their business, or the business will have to downsize, say experts.
Time Warner’s stock is dropping from the news. On Wednesday it closed 6.28% down on the day.