Time Warner issues its own earnings warning
The flush has worn off the merger approval victory Time Warner shares with AOL, and Time Warner (TW) is announcing less than glowing 4Q earnings.
The mega-media giant, which will be merging with AOL, reports the earnings slide is because of weaker ad revenue from its cable networks and a downturn in both its movie and music units. (Apparently, even Madonna can't prop them up.)
The announcement sent stocks of both companies plunging, with TW dropping $9.47, or 13 percent, to $63.25, and AOL falling $6.72, or 14 percent, to $42.24 at trading close Monday.
The AOL/TW deal is supposed to close in a few weeks. In light of TW's earnings announcement, analysts are wondering if the combined companies can meet the aggressive growth targets it has outlined for next year.
TW also announced it will be taking full control of Road Runner, it's high-speed data joint venture with AT&T. TW said it and Advance/Newhouse would pay $570 million in cash for the restructuring of Road Runner, most of which will be used to buy out Microsof and Compaq 's total 20 percent stake in Road Runner.
AT&T will take certain assets and its roughly 345,000 subscribers in exchange for giving up its 25 percent stake and will pay about $230 million toward the restructuring of Road Runner and the buyout of Microsoft and Compaq, according to a person familiar with the deal.