Time Warner (
) competes with other media and broadcasting companies like Disney
), News Corp (
), CBS (
), Viacom (
) and New York Times (NYT) in the media and entertainment business.
Our price estimate for Time Warner's stock stands at
, which is roughly in line with market price.
The trend to go digital has affected all form of media,
including magazines. Time Warner has moved to offer subscriptions
to its magazines like Sport Illustrated and People on connected
devices. More specifically, the company recently announced an
offering for Samsung's Galaxy tablet and Android-based smartphones
that bundles digital content and print versions of magazines at a
single price. The company will also offer a similar deal for its
Sports Illustrated and People magazines on HP's upcoming
Why This Move?
Magazines have been forced to adapt to the digital shift to stay
competitive. The trend has necessitated offers of digital content
as a complement to print business. Hybrid business models of
physical and digital media are nothing new (from newspaper
publications to Netflix), and this appears to be the next frontier
for magazines. Newspapers like The Wall Street Journal already
offer bundled packages, but the landscape remains relatively
uncharted for magazines.
See our full analysis and $35.51 price
estimate for Time Warner
How Does this Affect Time Warner?
While offering magazine content on Android-based phones does
provide a substantial mobile distribution platform, penetration of
the tablet market goes through the iPad. While no immediate plans
exist in this regard, Time Warner has expressed interest in
ultimately bringing its offering to Apple's gadgets. However, if we
look at the big picture, such a development might not yield much
upside to Time Warner's stock value, which primarily relies on the
company's TV and movie entertainment businesses.
We estimate that
magazines constitute only 12.4% of Time Warner's
, with Sports Illustrated representing just 2.5% and People
contributing another 4.2%.
The interactive chart above showcases the affect of changes
in Sports Illustrated subscribers on Time Warner's stock value.
As illustrated in this chart, the company's stock value is rather
insensitive to this metric.