Once considered the epitome of news and events on television, Time Warner’s (NYSE:TWX) CNN is struggling these days in the ratings. Given that CNN constitutes roughly under 10% of Time Warner’s value by our estimates, the company will need to take some steps to revive the channel.
What has gone wrong with CNN?
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Even though the channel still holds its appeal for major events, its overall programming does not seem as appealing as it used to be couple of decades ago. This holds true in terms of the programming content as well as its hosts and presenters. This may be a wake-up call for a management change and/or a strategy revisit. Even though the presidential elections are due in 2012, CNN has not yet been able to pick up its ratings given its past successes with the election seasons.
Our price estimate for Time Warner stands at about $40, implying a premium of little over 5% to the market price.Notes: