Time Warner Updates: Embraces Connected Devices, New Content Deals Support $39 Value

by Trefis Team
+16.12%
Upside
65.64
Market
76.22
Trefis
TWX
Time Warner
Source: Google Finance

Source: Google Finance

Rate   |   votes   |   Share

In last couple of weeks, the media company Time Warner (NYSE:TWX) has made some strides when it comes to leveraging new connected devices and bolstering content partnerships. Although the stock hasn’t done much justice to these moves. Similarly in early Nov. the company reported good quarterly results, but investors punished the stock perhaps because the results were influenced more by filmed entertainment rather than cable networks as the latter tends to be a more stable revenue stream. Below we take a brief look at recent developments. Time Warner competes with other media conglomerates like Disney (NYSE:DIS), Viacom (NYSE:VIA) and News Corp (NASDAQ:NWS).

Our price estimate for Time Warner stands at $38.84, implying a premium of about 15% to the market price.

Extends Device Reach

With the launch of Amazon’s (NASDAQ:AMZN) Kindle fire tablet, Time Warner will be making its magazines such as Fortune, People, Real Simple, Sports Illustrated and Time available on it. [1] The digital shift for its publishing business is nothing new for the company, and a necessary step to counter decline in traditional print sales. We have seen this happening for famous newspapers as well such as The Wall Street Journal.

In addition to the above, Time Warner is also coming close to finalizing the deal with Time Warner Cable (NYSE:TWC) to make its HBO Go app available for the cable provider’s subscribers. [2] This has already been done for several other pay-TV service providers, and serves as a modern move for Time Warner to keep its HBO viewers hooked.

Builds Partnerships

On content partnership side, Time Warner signed a deal with Europe’s streaming service provider Lovefilm, to make movies produced under banner of Warner Brothers available for Lovefilm’s subscribers. [3] This will add incremental dollars and help boost margins. Interestingly the move comes ahead of Netflix’s (NASDAQ:NFLX) U.K. launch and it seems that local competitors are bolstering their offering. The competition will be fruitful to content companies like Time Warner.

In addition to the above, the company also signed a deal with Disney’s ABC Television Group which will give ABC the right to distribute Warner Brother’s content online via its own site abc.com as well as Hulu. [4]

See our full analysis for Time Warner

Understand How a Company’s Products Impact its Stock Price at Trefis

Notes:
  1. Time Warner (NYSE:TWX) Taking Aim At Kindle Fire, Emoney Daily, Nov 17 2011 []
  2. Time Warner Cable Sees HBO Go Deal ‘Soon’ in Mobile Device Push, Bloomberg, Nov 17 2011 []
  3. WARNER BROS. AND LOVEFILM SEAL MAJOR MULTI-YEAR, MULTI-LAYERED UK MOVIE PARTNERSHIP, Time Warner Press Release, Nov 17 2011 []
  4. ABC ENTERTAINMENT AND WARNER BROS. TELEVISION GROUP REACH NEW DIGITAL DISTRIBUTION AGREEMENT, Time Warner Press Release, Nov 14 2011 []
Rate   |   votes   |   Share

Comments

Name (Required)
Email (Required, but never displayed)
Be the first to comment!