Business NotesFacebook vs. Time Warner: A Not-So-Rigorous Financial Evaluation
By David Carr, The New York Times
' 'Media Decoder' Blog - January 4th, 2011
Word arrived Monday that Facebook, the burgeoning social media company that surpassed Google last year as the most visited Web site, was worth $50 billion dollars based on a deal done by Goldman Sachs. By way of comparison, our colleagues Andrew Ross Sorkin and Evelyn M. Rusli pointed out that the company was worth more than Time Warner, the large U.S.-based media company, which closed the day with a market cap of about $37 billion.
That contrast got those of us at Decoder headquarters thinking: How can Facebook, a company that was cooked up by Mark Zuckerberg, give or take, in his dorm room at Harvard seven years ago be worth more than the world's largest media conglomerate, which owns HBO, Warner Brothers movie studio, and Time Inc, the big magazine publisher?
We thought a little comparison chart might help:Revenues
Time Warner: about $26 billion.
Facebook: approaching $2 billion according to analysts.Franchises
Time Warner has the Harry Potter franchise with over $6 billion in box office revenues.
Facebook has a Duct Tape page with over 3.3 million fans.Relationship Status
Time Warner ended a bad marriage with AOL in 2009, closing the book on what has been billed as the worst business merger in history.
Facebook, which prefers the role of matchmaker for others, has refused countless marriage proposals, including one from Google, and remained independent.Gimmick
Time Warner is pushing TV Everywhere so customers can see subscription content on any device at any time.
Facebook has like button.Whodunit Movie
Time Warner made half-a-billion dollars last year on a remake of Sherlock Holmes.
Facebook is the unauthorized star of Social Network, a movie last year about the fight for control of the site and its half-a-billion friends.
Okay, okay, we get it. Almost anyone could tell you that Time Warner is a legacy media business with big numbers that is stuck in slow-moving sectors that Wall Street finds uninspiring.
It's a tragedy that large organizations so often come merely to perpetuate themselves, said David Kirkpatrick, the author of The Facebook Effect and a former Time Warner employee at Fortune Magazine. The risk for Facebook is that it may soon come to be so big it faces the same problem.
Indeed, if Facebook continues to grow, it will be worth hundreds of billions of dollars, maybe as much as $350 billion which is what a rising digital superstar called AOL-Time Warner was worth 11 years ago at the height of the bubble.http://mediadecoder.blogs.nytimes.co...ref=television