AOL and Time Warner PR teams face future

NEW YORK: The two PR teams at the center of the America Online/Time Warner merger are waiting to see what fate awaits them, but in the meantime, both departments appear to have their work cut out as Wall Street tries to fathom the financial implications of the deal.

NEW YORK: The two PR teams at the center of the America Online/Time Warner merger are waiting to see what fate awaits them, but in the meantime, both departments appear to have their work cut out as Wall Street tries to fathom the financial implications of the deal.

NEW YORK: The two PR teams at the center of the America Online/Time

Warner merger are waiting to see what fate awaits them, but in the

meantime, both departments appear to have their work cut out as Wall

Street tries to fathom the financial implications of the deal.



Just as pundits are questioning who will emerge as the real power at

senior management level, so the two corporate communications teams, run

by Ed Adler (Time Warner) and Kathy Bushkin (AOL), will be playing out a

similar power struggle.



The future for the two agencies of record is no more clear: both Kekst &

Co (Time Warner) and Robinson Lerer & Montgomery (AOL) have enjoyed

decade-long business relationships. IR specialist Kekst worked with Time

before the Time Warner merger 10 years ago. And Ken Lerer, who has

enjoyed a decade-long relationship with AOL COO Bob Pittman, recently

joined the executive board of AOL as senior vice president (PRWeek,

January 10), in an unusual deal which sees him remaining a partner at

RL&M.



But after the media declared the move bold and visionary, the honeymoon

appears to be over for IR professionals, as analysts and journalists

start to pick holes in the finances. As PRWeek went to press on

Thursday, the stock of AOL in particular was proving a concern. The drop

in share price is directly impacting the deal itself, not set to close

until the end of this year. The initial price tag of dollars 184 billion

for the deal had been reduced to dollars 131 billion following the

decline in AOL’s stock.



A source close to Time Warner admitted that one of the challenges lies

in the fact that investors do not know how to value the new company.

’The challenge is the multiples,’ he said. ’America Online had a

multiple of around 100, while Time Warner’s is 15 times.’



BSMG Worldwide president and CEO Harris Diamond added: ’The challenge

for Internet companies like AOL is how to marry Internet valuations when

they try to do a transaction in the real world. It was a problem for

Home Shopping when it attempted to buy Lycos last year, and the deal got

called off.’



- See editorial, p12





TIME WARNER



Top personnel: Ed Adler, vice president corporate communications; Tim

Boggs, SVP of public policy; Joan Sumner, senior vice president (IR);

John Martin, VP of IR Agency of Record: Kekst & Co. (corporate and

IR)



Other agencies: Edelman Worldwide; Robinson, Lerer & Montgomery





AOL



Top personnel: Kathy Bushkin, chief communications officer and senior

vice president; Anne Brackbill, senior vice president of communications;

Richard Hanlon, VP, investor relations



Agency of record: Robinson, Lerer & Montgomery (corporate and IR)



Other agencies: Fleishman Hillard.



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