2000 Movie News Archives
January 11, 2000: AOL, Time Warner agree to largest merger everNEW YORK, Jan 10 (Reuters) - Top Internet services provider America Online Inc. will buy Time Warner Inc., the world's biggest media company, for $160 billion in stock, the companies said on Monday, joining the power of new and traditional media assets through the largest merger ever.
Shares of the two companies rose sharply in early trading, soon after news of a deal that will create an all-media empire that reaches from magazines and movies into cyberspace, and promises to remake the landscape of how people around the world communicate and are entertained and informed.
Enthusiasm for the proposed merger swept up shares of major media and technology companies in Europe and the United States, where it sparked a broad-based rebound in the Nasdaq stock market, especially among Internet and cable TV companies.
The deal marks the passing of the baton from old media to new, analysts said. It sets the stage for the next evolution of the Internet as distinctions between telecommunications, media and technology industries blur into a single industry.
Jeff Kagan, an independent telecommunications analyst in Atlanta, said the merger would speed the day when consumers may get telephone service, entertainment, news and information from a single source -- via Time Warner cable Internet networks.
"Everything is being rewritten from a sub-atomic level," he said.
America Online shares jumped as high as 85 in pre-open trading but fell back late Monday morning on the New York Stock Exchange as investor digested the terms of the deal. The stock ended the day at 71, down 1-7/8 points from Friday's close.
Time Warner stock surged as high as 98-1/4, but dropped back in tandem with AOL shares to close at 90-1/16, up 25-5/16, also on the NYSE. That pared back the value of the deal to Time Warner shareholders to just under $160 billion from as high as $190 billion in initial trading after the news on Monday.
While an AOL rival such as Microsoft Corp. or Yahoo Inc. might have the financial flexibility and strategic interest in acquiring Time Warner, there was no sign a bidder was preparing to emerge, takeover traders said.
Prior to the announcement, the biggest merger on record was MCI WorldCom Inc.'s agreement to buy Sprint Corp. for $115 billion, although the current $132 billion hostile bid by British-based cellular phone company Vodafone for Germany's Mannesmann would rank higher.
A SYMBOLIC CHANGING OF THE GUARD
America Online Chairman and Chief Executive Steve Case, 41, was named chairman of the merged companies and Time Warner Chairman and Chief Executive Gerald Levin, 61, will serve as chief executive, the companies said in a statement.
"It gives me great pleasure to welcome the suits from Virginia here to New York," Levin joked at a carefully staged news conference in which the Manhattan media mogul appeared tieless in a rumpled tweed coat while AOL executives suited up in pinstripes.
The combined company is to be known as AOL Time Warner and trade under the ticker symbol "AOL."
"This is the first time a major Internet company has merged with a major media company and the possibilities are endless," Case said in a conference call with analysts as he touted the advertising and electronic commerce prospects of the deal.
The takeover will create a media conglomerate with unprecedented reach across traditional and new media, allowing the delivery of programming from Time Warner's stable of brands onto the Web and giving AOL access to Time Warner's U.S. cable television network to offer high-speed Internet access.
AOL Time Warner brings together Time Warner's Time, CNN, Warner Bros., People, HBO, Sports Illustrated, Cartoon Network, Warner Music Group, Fortune, Entertainment Weekly and Looney Tunes with America Online's AOL, CompuServe, Netscape, ICQ youth-oriented messaging network, Digital City, and Moviefone.
[SY: Of note to Superman fans is the fact that Time Warner owns Warner Bros. who owns DC Comics.]
Under a fixed exchange ratio, Time Warner shareholders will receive 1.5 shares of AOL Time Warner for each share of Time Warner stock they own while AOL shareholders will receive one share of AOL Time Warner stock for each share of AOL they own.
AOL shareholders will hold 55 percent of the merged company, while Time Warner shareholders will hold 45 percent.
VALUING THE COMPANY ON PAST, PRESENT OR FUTURE?
Terms of the deal took into account the fact that AOL's market capitalization ahead of the announcement was twice the size of Time Warner's. That was weighted against the reality that Time Warner's strong cash flow is roughly four times larger than that of America Online.
"Time Warner provides AOL with an important missing link," Bear Stearns analyst Scott Ehrens said in a research note. He argued that the importance of the deal was how it provided AOL with access to Time Warner's high-speed cable television network, which reaches 20 percent of U.S. cable TV subscribers.
The stock had been hurt in recent months by concerns that AOL would be shut out of the emerging market for high-speed Internet services.
The merger will be accounted for as a purchase transaction and is expected to be add to America Online's cash earnings per share before the amortization of goodwill.
Lehman accounting expert Robert Willens estimated the deal would generate a staggering $158 billion in goodwill write-offs. Amortized over a 20-year period, that would dilute earnings per share by $2 a year, wiping out AOL Time Warner's expected profits for years to come, he said.
Securities analysts had forecast AOL would only generate 32 cents per share during its fiscal year ending June 2000, according to First Call/Thomson Financial, which tracks broker estimates. Separately, Time Warner was expected to produce earnings per share of 61 cents during calendar year 2000.
But Wall Street appeared to brush off that concern, focusing instead on the deal's cash-generating power, the common barometer used to measure the performance of debt-laden media companies.
UBS Warburg analyst Mike Wallace cautioned that AOL investors may have second thoughts about the deal as they mull Time Warner's slower growth rate -- an issue that cast a cloud over previous marriages between traditional and new media.
The merger with America Online comes exactly 10 years to the day after Time Inc. merged with Warner Brothers in deal that created the world's largest media conglomerate.
The latest transaction, which is subject to certain closing conditions, including regulatory approvals and approval by America Online and Time Warner shareholders, is expected to close by the end of 2000.
The deal was only a few hours old when a phony press release began making the rounds on the Internet that jokingly referred to the combined company as eLeviathan.
Antitrust experts said America Online Inc.'s proposed purchase of Time Warner appears likely to clear antitrust agencies, but consumer groups said they opposed the merger because it would reduce AOL's political drive to force open cable networks to alternative programming from other networks.
Tom Pilla, a spokesman for AOL rival Microsoft, said the massive deal was the latest demonstration of how vital the Internet economy remains: "The merger today is further evidence of just how competitive and dynamic this industry truly is.
2000 Movie NewsListed below are all the Movie News items archived for 2000.
- January 11, 2000: AOL, Time Warner agree to largest merger ever
- January 24, 2000: Supergirl DVD Update
- February 16, 2000: It's a Bird! It's a Plane! It's John Williams' Complete Superman Score!
- February 17, 2000: 'Superman' Draft Turned In
- February 27, 2000: Superman Meets Matrix
- April 16, 2000: Superman: The Movie coming to a Cinema Near You!!!
- April 18, 2000: Superman Movie Memorabilia on Auction
- April 19, 2000: 'Superman' Re-release Update
- April 25, 2000: Superman Orchestrator Arthur Morton Passes Away at 91
- April 28, 2000: Superman DVD Update
- May 25, 2000: Christopher Reeve Superman costume - SOLD!
- June 9, 2000: Nicolas Cage - Up, Up and... he's out of here!
- June 15, 2000: Superman DVD Update
- June 27, 2000: Direct Approach for Superman Lives
- July 28, 2000: Superman DVD Update
- August 13, 2000: Superman DVD Delayed
- August 16, 2000: Superman DVD Interview
- August 17, 2000: Superman DVD Inside Info
- August 26, 2000: A Gladiator as Superman?
- August 27, 2000: Superman DVD in the News
- September 4, 2000: Superman Sexy?
- October 27, 2000: Superman vs Lobo Movie?
- November 7, 2000: Chat with Non!
- December 5, 2000: Superman: The Movie Theatrical Re-Release and DVD Update
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