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Monday, July 17, 2006

Widely Traded 48 Hour Clock: TimeWarner, King Of Old Media


The business press has been filed with rumors that executives from newspaper companies like Hearst have been camping out in the lobby of Yahoo! trying to make classified and content deals with the internet giant. It would only make sense. Yahoo! has a distribution network that newspapers lack but have huge libraries of content and millions of classified ads.

Yahoo!, according to Hitwise, has 129 million unique visitors a month in the US. That dwarfs anything numbers that an old media site, even the New York Times, can put up.

Investors in Time Warner should hope that the company's AOL units is romancing old media types even more ardently that Yahoo! is. AOL typically ranks in the Big Four internet portals with Micosoft's MSN, Google and Yahoo!. And, AOL needs the business more.

If AOL is indeed planning to eliminate subscription fees to a number of its subscribers to try to increase the online audience it will offer advertisers, it will need some help. Old media firms are perfect partners. They bring content AOL lacks and local advertising that, with large online distribution, should create a revenue stream large enough for two companies to share.

Time Warner executives stopped talking about the synergy between old media and new media that drove the original merger with AOL. Published accounts indicate that the magazine, TV network and studio people did not play nicely with AOL, and the initiatives went no where.

That does not mean that programs that drive old media content to new media eyeballs is a bad idea. It is actually a very good one. It may not have worked for Time Warner at an earlier stage but, AOL has the opportunity to forge relationships with companies like The Washington Post, The New York Times, and Gannett that could supply content and local advertising at a level that would not have been imagined a few year ago. And, people are willing to look at it online now.

The Q2 results from The Tribune, Gannett, and the Journal Register clearly indicate that on their own these companies cannot create a large enough online audience for their properties to offset the attrition of print advertising and circulation revenue. That doesn't mean that they couldn't do it with AOL.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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