SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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and communications businesses and technologies. The combined company, AOL Time
Warner, will be uniquely positioned to deliver branded information,
entertainment and communications services across rapidly converging media
platforms and to take full advantage of the emergence of the Internet and the
ongoing digital revolution.
 
   In reaching the conclusion that the combination of Time Warner and America
Online is in the best interests of Time Warner and its stockholders, the board
of directors of Time Warner consulted with senior members of Time Warner's
management team regarding the strategic and operational aspects of the merger
and the results of the due diligence efforts undertaken by management. In
addition, the board of directors of Time Warner consulted with representatives
of Morgan Stanley, financial advisor to Time Warner, regarding selected
financial aspects of America Online's business and future prospects and
challenges facing Internet businesses in general and America Online in
particular, as well as the fairness, from a financial point of view, to Time
Warner's holders of common stock and series common stock of the proposed ratio
for exchanging shares of Time Warner common stock or series common stock for
shares of AOL Time Warner common stock or series common stock. The board of
directors of Time Warner also consulted with Time Warner's internal counsel and
with representatives of Cravath, Swaine & Moore, outside counsel to Time
Warner, regarding the duties of the members of the board of directors, legal
due diligence matters and the terms of the merger agreement and related
agreements. In considering the information provided by senior members of Time
Warner's management team, representatives of Morgan Stanley and representatives
of Cravath, Swaine & Moore, in analyzing the terms of the merger agreement, and
in coming to its endorsement of the merger, the board of directors of Time
Warner considered a variety of factors, a number of which are summarized below.
   
   Strategic Advantages. The board of directors of Time Warner reviewed
presentations from senior members of Time Warner's management team regarding
the strategic advantages of the combination of Time Warner and America Online.
The Time Warner board of directors considered management's view that the
combination of Time Warner's world-class media brands, subscriber bases and
technologically advanced broadband delivery systems with America Online's
renowned consumer online brands, subscriber base and extensive Internet
infrastructure and expertise will provide AOL Time Warner with strengths and
synergies in all its businesses. The Time Warner board considered management's
view that AOL Time Warner's multiple brands, vast array of content, extensive
infrastructure and strong distribution capabilities will provide it with a
greater capacity to capitalize on and propel the convergence of media,
entertainment and communications than Time Warner, or America Online, alone.
The Time Warner board of directors also considered the strategic benefits of
combining Time Warner's broadband infrastructure with America Online's
established success in managing consumer migration online. The Time Warner
board of directors also noted that this strategic combination would accelerate
the digital transformation of Time Warner by infusing all of Time Warner's
businesses with a heightened digital focus.     
 
   Potential for Growth. The board of directors of Time Warner considered the
view of senior members of Time Warner's management team that the combination of
Time Warner and America Online is expected to strengthen the ability of these
companies to generate growth in revenue, earnings before interest, taxes and
amortization, or "EBITA," earnings before interest, taxes, depreciation and
amortization, or "EBITDA," and cash flow. In particular, the Time Warner board
of directors considered management's view that:
 
  .  America Online's extensive Internet infrastructure is expected to
     provide a new and expanding distribution medium for Time Warner's
     popular brands, thereby giving its content businesses increased access
     to the consumer; and
 
  .  Time Warner's advanced broadband delivery systems are expected to
     provide an important distribution platform for America Online's
     interactive services, which is expected to result in incremental
     subscriber growth.
 
   In addition, the Time Warner board noted management's view that:
 
  .  in the music business, AOL Time Warner will bring together Time Warner's
     prestigious labels and roster of established and new artists with
     America Online's established e-commerce capabilities, and
 
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