Blog: Spirit of Money, Financial Fluidity
by munificent

Time Warner/Google

Again...He was the creator of greenmail back in the 80's- I really haven't kept up with him in the 2000's, but he's after the Googel tribunal (Time Warner)and that's Big Business- Google just became part of the Nasdaq 100- big stuff-heady money

Date:   12/20/2005 10:52:13 AM   ( 16 y ) ... viewed 1211 times

Icahn Attacks AOL-Google Deal

Carl Icahn begs Time Warner shareholders to stop Google from taking a stake in AOL.
December 19, 2005

With Time Warner’s board expected to vote Tuesday to sell 5 percent of AOL to Google, shareholder activist Carl Icahn on Monday decried the $1-billion deal as a “disastrous decision.”

Mr. Icahn, a Time Warner shareholder who has been pushing the company to make changes at the AOL unit and its cable properties, said in a letter to shareholders that a deal with Google could prevent more lucrative deals with other players (see Icahn Warns Time Warner and Icahn Pressures Time Warner).

The proposed deal follows months of negotiations between Time Warner and several leading companies that want to strengthen their online presence. At various times, Yahoo, Microsoft, and Google all were viewed as potential partners for AOL (see AOL-Google Deal Set for Vote).

Mr. Icahn pointed to a research note last week from Goldman Sachs analyst Anthony Noto, who said that Time Warner would derive greater long-term benefits from partnering with IAC/Interactive, eBay, or Yahoo rather than with Google or MSN.

‘I am deeply concerned that the Time Warner board may be on the verge of making a disastrous decision.’

-Carl Icahn

“I am deeply concerned that the Time Warner board may be on the verge of making a disastrous decision concerning an agreement with Google if this agreement would make it more difficult in any way, or effectively preclude a merger or other type of transaction, with companies such as IAC/InterActive, eBay, Yahoo, or Microsoft, etc.,” said Mr. Icahn in the open letter to shareholders.

“I also question whether Google is the best partner for unlocking the value of the AOL asset,” he said.

However, the Google offer implies a value of $20 billion for AOL. Just six weeks ago, Time Warner reportedly discussed swapping AOL for $10.6 billion in Yahoo stock, although Yahoo denied it ever made a formal offer (see Yahoo Denies it Bid for AOL).

Time Warner’s stock rose $0.10 to $18.10 in recent trading.

Partner Wanted
AOL needs traffic, technology, a strong search offering, as well as a global partner, said Mr. Noto. But in a new research note issued Monday, the analyst said Google could meet some of those needs, calling the potential relationship a “net positive.”

“The likely deal could give AOL a direct relationship with search advertisers, more traffic [and] the ability to sell branded ads via Google’s publisher network,” said Mr. Noto.

AOL’s greatest challenge, according to many analysts, is to bring in enough users through initiatives to offset the loss of revenue from the decline in its customers. The deal with Google could help, analysts say, given the Mountain View, California-based search giant’s expertise and dominance in the online advertising market.

However, Mr. Icahn dissented. “The real risk for Time Warner shareholders is that a Google joint venture may be short-sighted in nature and may preclude any consideration of a broader set of alternatives that would better maximize value and ensure a bright future for AOL,” said Mr. Icahn.

Time Warner spokesperson Kathy McKiernan said, “There’s nothing new here, and we’re not going to comment.”

Regardless of the benefits for AOL, the deal would be a positive for Google. It could help the search company keep Microsoft from linking up with AOL, which offers millions of potential customers.

Also, it would allow Google to retain its biggest customer. The search giant derives about 10 percent of its advertising revenue from AOL.

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