Wall Street analysts may be underestimating the value of Time Warner’s CNN unit, people with close knowledge of its operations said.
If Rupert Murdoch’s 21st Century Fox is successful in its effort to buy Time Warner Inc., it is expected to sell CNN, which competes with the Fox News Channel. Such a move probably would ease, though hardly eliminate, the concerns of the Justice Department, which would review such a deal for potential antitrust concerns.
Two prominent media analysts — Marci Ryvicker of Wells Fargo and Kannan Venkateshwar of Barclays — have both put CNN’s value around $4.3 billion, adjusted for taxes. Pretax value is estimated to be in the $6-billion to $7-billion range.
That estimate is low, said current and former senior executives at Time Warner, who declined to speak publicly on the matter because of the 21st Century Fox situation. One former executive put CNN’s worth at $8 billion to $12 billion. A company insider said $8 billion to $10 billion was in the ballpark.
Although CNN’s ratings are down in the U.S. and it is struggling to find a programming strategy, it is still very profitable and attracts premium advertisers. CNN International, which is in more than 200 countries and is very successful, is also important. CNN’s online operations are solid as well.
The CNN unit also includes HLN (formerly Headline News), although it is unclear whether 21st Century Fox would shed that asset as well because HLN has moved away from being a hard-news channel in recent years in favor of covering high-profile criminal trials and celebrity fare.
CBS is mentioned as the most likely buyer for CNN. Last week, CBS Chief Executive Leslie Moonves again said his company would certainly look at CNN if it were to become available. CNN and CBS have had talks in the past about creating a joint venture.
Walt Disney Co.’s ABC News has also flirted with CNN and would probably at least take a look at the network as well.
Source: MCT Information Services