Time Warner Gives Up on Synergy

AFTER YEARS OF PUSHING SYNERGY, TIME WARNER INC SAYS ENOUGH
[SOURCE: Wall Street Journal, AUTHOR: Matthew Karnitschnig at matthew.karnitschnig@wsj.com]
"It's bull-." That's how Time Warner President Jeffrey Bewkes assesses the synergy message his predecessors preached to shareholders. This is an unusual enough sentiment in a rapidly consolidating corporate world, but for Time Warner, it's a philosophical turnabout, illustrating how the media industry has thrown off the conventional wisdom of only a few years ago. Other media companies such as Viacom and Liberty Media have already broken themselves up. Time Warner, currently the world's largest, has stopped requiring that its units cooperate -- instead of "synergies," managers speak of "adjacencies." It's also selling businesses that don't make enough money. The re-evaluation was driven in part by rapid changes in technology that fed investor disquiet about the viability of older and slower media giants. Innovations such as digital-video recorders, online music sales and user-generated content on the Internet have contributed to a prolonged slump in stock-market valuations. Time Warner and its peers were also caught flat-footed by the emergence of new players such as Yahoo and Google.
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