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Likely break-up of Time Warner marks the beginning of the end of the vertically-integrated media company 12/13/07

Posted by Steve Boriss in SpinOffs, TimeWarner.
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The media industry is a decade or two behind most others in regards to how to organize their businesses — but not for too much longer. Once it was considered to be a sign of strength for businesses to perform as many functions as they could in-house. But now it is understood that if another company can perform a function better and cheaper, it’s usually best to outsource that function to them to take advantage of their higher quality and lower costs, and focus on the things you do best — your core competencies. Yet today, for example, we have many newspapers that are in the completely different journalism and printing businesses, when only journalism represents a core competency and their less-than-state-of-the-art printing presses sit by, idle and under-used, much of the time.

Based on personnel moves reported by the NY Times, it looks like Time Warner, parent of content-creators like CNN, AOL, and Time/People/Fortune/SportsIllustrated magazines, may be about to shed its content distribution businesses. Many are speculating that Time Warner Cable and AOL’s Internet access business will soon be up for sale. The wisdom of these moves assumes that journalism and other content-creation are, indeed, core competencies of Time Warner, an Old Media company now trying to compete in New Media. That remains to be seen.

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