• Bloomberg, Tuesday, July 17, 2007 11 AM

Time Warner may be preparing to shed AOL and other properties in an effort to push its stock price to $25, according to a recent report from Pali Capital. Analyst Richard Greenfield raised his rating on TW's stock from "neutral" to "buy," on speculation that the media giant would sell its cable unit and either spin off or sell its AOL Internet division. Greenfield added that Time Warner should get rid of Time, Inc., too.

"The synergy between Time Warner's divisions is limited at best; sometimes even creating the risk to destroying value at one division to help another," Greenfield wrote. "Its complexity has, without doubt, become a liability in the public market." Greenfield's analysis brings to mind a greater question: In a post-Web 2.0 world, are traditional media giants now relics of a bygone era?

Investors seem to think so. Last year, billionaire Carl Icahn unsuccessfully tried to overthrow the Time Warner board and persuade the media giant to shed AOL and other properties. Icahn did manage to spur CEO Richard Parsons into action, as Time Warner overhauled AOL's main business model, repurchased company stock, and pledged to cut costs by $1 billion over two years. At a board meeting later this month, Time Warner will be discussing the future of its units; Greenfield says another option could be a share buyback of at least $14 billion of stock.

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