Commentary

Shopping For Media Companies: Univision Vs. Time Warner

When investing in media, be sure nothing is lost in any financial translation. Stick with good language and you'll have an easy decision. That's how to make the choice between Univision and Time Warner.

On the same day Univision was hiring an investment banker for possible sale, potential Time Warner executives, such as Frank Biondi, were figuring out how best to break up the company.

Univision's stock rose 12 percent on that day; Time Warner's rose 0.98 percent.

Whom would you choose?

Speak the language of Univision: claro!

This isn't exactly a fair, either/or comparison--especially for a potential controlling shareholder of these companies. Univision is tiny by comparison, only $2 billion in revenue a year ; Time Warner dwarfs it with some $44 billion in annual revenue.

But the core story for Univision is easy to translate--it's Spanish-language television for the still booming Hispanic market.

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Time Warner's core story is what Frank Biondi and Carl Icahn call value creation --breaking up the company into four pieces: networks and filmed entertainment, cable TV systems, publishing, and AOL.

Time Warner would love its stock to be Univision's stock, which sits at just over $34 a share--almost double Time Warner's.

The magic is that for decades, Univision, controlled by A. Jerrold Perenchio, has never stopped growing--even with the dent over the years from Telemundo. Better still, this segment of the business continues to grow. Time Warner, itself, could be a buyer of Univision, along with possibly Viacom or CBS.

Some analysts believe this is an easy decision; others believe big media companies don't need the expense and grow all this all organically. Here's another tipping point: the expensive 15 to 19 times cash flow--possibly putting a $12 billion price tag on Univision.

How good is that? It's about 60 percent more than Disney is paying for the valuable Pixar Animation Studios.

Time Warner is in a different financial time zone. Make that war zone. Wannabe Time Warner leader Frank Biondi says all roads still point to AOL as the company's main reason for its jet lag. Biondi says AOL long ago missed its opportunity to become a Yahoo or a Google, and, that despite of recent investor warming to AOL, the big business days for the company are essentially over.

Time Warner may pick up some drama in the end at least. Biondi says he wants Ted Turner to weigh in. The Mouth from the South--who has been a little hushed in recent years--may have one more good rap left in him. He even knows a little Spanish.

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