SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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   The group of selected media and entertainment companies included Cablevision
Systems Corporation, The Walt Disney Company, Fox Corporation, News Corp. Ltd.,
The Seagram Company Ltd. and the combined Viacom/CBS Corporation entity. Morgan
Stanley selected these companies because they are publicly traded companies
with media and entertainment operations that for purposes of this analysis may
be considered similar to those of Time Warner.
 
   The group of selected Internet companies included Excite, Inc., Lycos, Inc.,
Yahoo! Inc., Amazon.com, Inc. and eBay Inc. Morgan Stanley selected Excite,
Lycos and Yahoo! because they are publicly traded companies with Internet
portal operations that, for purposes of this analysis, may be considered
similar to those of America Online. Morgan Stanley also selected Amazon.com and
eBay because they are publicly traded leaders in e-commerce retail which,
because of their leading positions in this market, may be considered for
purposes of this analysis similar to America Online.
 
   The analysis showed the following multiples:
 

<TABLE>
<CAPTION>
                                                                   Estimated
                                                                   Aggregate
                                                                 Value/EBITDA
                                                               -----------------
                                                               1999  2000  2001
                                                               ----- ----- -----
   <S>                                                         <C>   <C>   <C>
   Time Warner................................................ 19.4x 17.5x 15.4x
   Group of selected media and entertainment companies:
     Mean..................................................... 18.7x 15.8x 13.8x
     Median................................................... 16.2x 14.7x 12.8x
<CAPTION>
                                                                   Estimated
                                                                   Aggregate
                                                                 Value/Revenue
                                                               -----------------
                                                               1999  2000  2001
                                                               ----- ----- -----
   <S>                                                         <C>   <C>   <C>
   America Online............................................. 33.6x 25.8x 21.1x
   Excite, Lycos, Yahoo:
     Mean..................................................... 89.9x 57.6x 40.1x
     Median................................................... 38.8x 24.0x 16.8x
   Amazon.com, eBay:
     Mean..................................................... 48.5x 29.5x 20.3x
     Median................................................... 48.5x 29.5x 20.3x
</TABLE>

 
   Securities Research Analysts' Future Price Targets Analysis.  Morgan Stanley
reviewed the 12-month price targets for the shares of common stock of each of
Time Warner and America Online as projected by analysts from various financial
institutions in recent reports. These targets reflected each analyst's estimate
of the future public market trading price of Time Warner common stock and
America Online common stock at the end of the particular period considered for
each estimate. Morgan Stanley then arrived at the present value for these
targets using an estimated equity discount rate of 12.7% for the Time Warner
common stock and 18.5% for the America Online common stock.
 
   This analysis showed the following mean and median values for the Time
Warner and America Online common stock:
 

<TABLE>
<CAPTION>
                                                            12-Month Analysts'
                                                               Price Target
                                                           ---------------------
   Time Warner                                             Nominal Present Value
   -----------                                             ------- -------------
   <S>                                                     <C>     <C>
   Mean...................................................  $ 82        $74
   Median.................................................  $ 81        $73
<CAPTION>
                                                            12-Month Analysts'
                                                               Price Target
                                                           ---------------------
   America Online                                          Nominal Present Value
   --------------                                          ------- -------------
   <S>                                                     <C>     <C>
   Mean...................................................  $ 97        $84
   Median.................................................  $108        $94
</TABLE>

 
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