Christopher R. Pavese, CFA Broyhill Case Study: Time Warner Value Creation
Throughout history, media tycoons have had two choices for survival: buy or be bought. Of course, there are exceptions to every rule: Jeff Bewkes, Chief Executive Officer of the once sprawling Time Warner media empire, hardly fits the mogul mold.
With the AOL-Time Warner “deal of the century” in his rear-view mirror, Time Warner has generated significant returns with Bewkes at the helm by pulling three levers: optimizing its cost structure, highlighting value in subsidiaries through spinoffs, and buying back shares.
We believe his actions were a logical counterbalance to the era of empire building that preceded him. He was dealt a messy hand comprised of several divisions whose substantial values were obscured by the overhang from an ill-conceived merger and poorly executed integration. Bewkes pursued the unglamorous and often thankless task of breaking apart that empire. His shareholders have him and his team to thank for it.
Full letter form Broyhill hereBroyhill_TWX_Value_Creation_Case_Study