SEC Filings

WARNER MEDIA, LLC filed this Form S-4/A on 03/24/2000
Entire Document
the absence of any adverse material change in the financial condition and
prospects of Time Warner, America Online or the industry or in the financial
markets in general, which could affect the public trading value of the
companies and the aggregate value of the transactions to which they are being
compared. Mathematical analysis, such as determining the mean or median, or the
high or the low, is not in itself a meaningful method of using peer group data.
   In connection with the review of the merger by Time Warner's board of
directors, Morgan Stanley performed a variety of financial and comparative
analyses for purposes of rendering its opinion. The preparation of a fairness
opinion is a complex process and is not necessarily susceptible to a partial
analysis or summary description. In arriving at its opinion, Morgan Stanley
considered the results of all of its analyses as a whole and did not attribute
any particular weight to any analysis or factor considered by it. Morgan
Stanley believes that the summary provided and the analyses described above
must be considered as a whole and that selecting portions of these analyses,
without considering all of them, would create an incomplete view of the process
underlying its analyses and opinion. In addition, Morgan Stanley may have given
various analyses and factors more or less weight than other analyses and
factors and may have deemed various assumptions more or less probable than
other assumptions, so that the range of valuations resulting from any
particular analysis described above should therefore not be taken to be Morgan
Stanley's view of the actual value of Time Warner or America Online.
   In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Time Warner or America
Online. Any estimates contained in Morgan Stanley's analysis are not
necessarily indicative of future results or actual values, which may be
significantly more or less favorable than those suggested by these estimates.
The analyses performed were prepared solely as a part of Morgan Stanley's
analysis of the fairness from a financial point of view to the holders of
common stock and series common stock of Time Warner of the exchange ratio
pursuant to the merger agreement and were conducted in connection with the
delivery by Morgan Stanley of its opinion dated January 9, 2000 to the board of
directors of Time Warner. Morgan Stanley's analyses do not purport to be
appraisals or to reflect the prices at which shares of common stock or series
common stock of Time Warner or America Online might actually trade. The
exchange ratio in the merger was determined through arm's length negotiations
between Time Warner and America Online and was approved by Time Warner's board
of directors. Morgan Stanley did not recommend any specific exchange ratio to
Time Warner or that any given exchange ratio constituted the only appropriate
exchange ratio for the merger.
   Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, as part of its investment banking and financial
advisory business, is continuously engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the past, Morgan Stanley and its affiliates have provided
financial advisory and financing services for Time Warner and America Online
and have received customary fees for the rendering of these services. In the
ordinary course of business, Morgan Stanley may from time to time trade in the
securities or indebtedness of Time Warner and America Online for its own
account, the accounts of investment funds and other clients under the
management of Morgan Stanley and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in these securities
or indebtedness.     
   Time Warner has agreed to pay Morgan Stanley a financial advisory fee of
$12.5 million upon execution of the merger agreement and, upon completion of
the merger, $47.5 million plus a contingent amount, not to exceed $15 million,
based on the enterprise value of Time Warner implied by the average trading
price of AOL Time Warner common stock for five days after completion of the
merger. Time Warner has also agreed to reimburse Morgan Stanley for its
expenses incurred in performing its services and to indemnify Morgan Stanley
and its affiliates, their respective directors, officers, agents and employees
and each person, if any, controlling Morgan Stanley or any of its affiliates
against certain liabilities and expenses, including certain liabilities under
federal securities laws, related to or arising out of Morgan Stanley's
engagement and any related transactions.