Paramount & Time-Warner AOL

There was a piece a little while ago in the Financial Times arguing fuzzily that Time Warner would have been better off without AOL. A letter to the editor in today’s FT rebuts that, calling Time-Warner management consistently incompetent — and offers a history lesson in response:

“In 1989 Paramount offered Time’s equity-holders – on an unsolicited basis – $200 for each common share. Seeking the safe harbour of Delaware’s court system, Time and Warner Brothers staunchly rebuffed the Paramount takeover offer, with the result that their executive hierarchy remained happily intact … Allowing for splits, a Time Warner share purchased in 1989 is today worth slightly less than $125 – almost 40 per cent below the price offered by Paramount more than 14 years ago. By comparison, a comparable investment in the Dow Jones index would have more than tripled in value.”