The New York Times' Tim Arango runs an an amazing story this morning--about the future of Time-Warner under Jeff Bewkes--that TCG thinks needs some more play: Time-Warner, the perpetually troubled and stock-price-depressed parent company of CNN, has brought in one Douglas Shapiro, described by the Times as "a well-known stock picker for Banc of America Securities, a subsidiary of Bank of America," who "joined Time Warner about a month ago and is expected to become head of investor relations under Mr. Bewkes, who will officially take the reins of the company on Jan. 2."
The Times continues, describing the Bewkes future:
One widely expected move is a complete spinoff of Time Warner Cable in the spring, when the company will be able to break off its cable unit without incurring a large tax bill. A sale of AOL’s Internet access business is also thought to be on the agenda.
As head of the department that communicates with Time Warner’s long-suffering investors — the shares have lagged since the ill-fated 2001 merger with AOL — Mr. Shapiro will probably spend much of his time explaining how Mr. Bewkes’s plans, which will be slowly unveiled in the early months of next year, will help improve shareholder value.
And it seems that Shapiro has been among the analysts talking about a spinoff/restructuring/breakup. And now--whaddya know!--he has gone from speculating about a breakup, in his analyst capacity, to helping plan such a breakup, and touting it.
All that's fine with TCG; everyone has to make a living--and somebody needs to undo the mess made by Jerry Levin and Ted Turner. (Remember when T-W was over $100 a share?) But now let's take a look at this, also from the Times story:
Mr. Shapiro left Banc of America in May and joined Time Warner about a month ago. In his last published report on Time Warner, in February, he had a buy recommendation on the stock and a price target of $25 a share. The stock has lately traded under $17 a share. In that report he recommended the stock partly because “we think there is a chance it pursues a restructuring eventually, including possibly divesting publishing or AOL, or even a full breakup of the company into is four logical components.”
Is it just me, or does that sound a little strange to you, too--this sequence of events? T-W stock was around 22 back in February, and Shapiro suggests that it was going to go to 25. Instead, it heads down, to 16.63, as I type this. So now Shapiro comes in, presumably with some sort of mandate to help break up the company. So now will the stock go up?
Isn't it kinda strange that Shapiro, who has been something of an umpire for T-W, in his capacity as an analyst, is now suiting up to get on the field as a player? One wonders what the law is on this sort of relationship--and relationship changing.
And so some questions: Who said what to whom? Whom did Shapiro talk to, at T-W, back in February? And since? When did his role shift from trying to squeeze information out of the company--a perfectly legit function for an analyst--to trying to squeeze a bigger pay package out of the company he was going to work for? At what point did Bewkes and Shapiro reach a meeting of the minds? And form a common plan for the future
