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
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
- See editorial, p12
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
Other agencies: Edelman Worldwide; Robinson, Lerer & Montgomery
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.