• by David Goetzl  @dgoetzl, September 11, 2008

A top Time Warner executive threw lukewarm water Wednesday on any possible merger or alliance with NBC Universal. Questions about the future of NBC (now NBCU) within General Electric have percolated for at least a decade now, but the likelihood of a divestiture remains slim.

Time Warner Executive Vice President and CFO John Martin said his company has not "heard anything that they would be interested in selling or be open to a potential strategic alliance." GE has also denied the idea.

Martin was responding to a question at an investor conference, which suggested that a partnership between the two would lead to heavy cost savings and spur growth via complementary properties. He declined to comment on any of those possible benefits, or other details related to NBCU.

"Like anything else in our space," he said, "we'd be interested in taking a look and understanding the potential opportunities. Without being more specific to that one potential company, anything that we would do about a strategic alliance or [in] the M&A space ... we would take a very disciplined look. It would have to be very, very compelling."

A CNBC.com report back in May said that executives at both Time Warner and NBCU were considering a merger.

But the prospect has multiple quixotic aspects. Can MSNBC and CNN be housed under the same roof? Would the government allow so many cable channels at the same company? Why would NBCU want anything to do with AOL or Time Inc.?

Also on the M&A front, Martin reiterated that Time Warner was a participant in a recent auction for the Weather Channel, but pulled out as the cost became too high--reported at $3.5 billion. (TWC went to NBCU, which received funding from two private-equity firms.)

Martin said the issue was price--since strategically, the weather property "would have bolstered CNN's competitive position. So it really fell right in the sweet spot of what we would consider doing."

As for cost-savings regardless of NBCU, Martin said Time Warner had identified $50 million in possible cuts at the corporate level for this year, and may exceed that. The company, he said, needs to "make sure that we're applying the right amount of resources there." One reason behind Carl Icahn's 2006 push to take over the company was a belief that profitability could increase as costs at the corporate level went down.

Within operating divisions, Martin said the Turner cable networks are thriving--and on pace to post a double-digit-percentage gain in advertising for the third quarter. Turner was up 10% in the third quarter last year; a gain would exceed that figure.

He said Turner is "not yet feeling any negative impacts from the economy. We feel good about how things have paced in the third quarter and as far out as we can see."

A different story has emerged at the Time Inc. publishing group, he said. In 2007, the group posted a 1% increase in ad dollars. Total revenues were $5 billion, but the company does not break out exactly how much came from advertising.

But Martin said there has been a "real downturn very quickly." Ad dollars declined 10% in this year's second quarter, and he indicated that they would be down even more in the third quarter. "Things haven't gotten any better," he added.

Asked whether Time Warner would consider selling the division, he said its free cash flow and growth potential when the economy turns around would discourage that.

"Print has some secular challenges, but we think there are many things that distinguish our national magazines from what has happened in the local businesses, like newspapers and to a lesser extent, radio," he said.

Online ad dollars at the magazine group are growing at a healthy pace, he noted, and now account for about 15% of the total.

AOL has also faced some hurdles because of the economy, Martin said. The division had slight advertising growth early this year, but its ad network business has slowed, lessening "our confidence in the back half of the year."