Will Time Warner (TWX) Buy CBS (CBS)?

Now that Time Warner (TWX) CEO Jeff Bewkes is accumulating a vast pile of cash from the spin-off of Time Warner Cable and the possible sale of AOL, what will he do with it? Speculation within the media industry is that he might buy CBS.

This makes sense. CBS’s stock has been smashed as investors have grown tired of the company’s formula of “no growth + financial engineering = shareholder value,” and its enterprise value is now only $20 billion. (This compares to Time Warner’s own enterprise value of $90 billion.) Unlike AOL and Time Warner, moreover, CBS and Time Warner actually could benefit from “synergy.”

Of course, since Jeff Bewkes has made clear in the past that he regards synergy as “b.s.,” this rationale may not carry much weight. But Time Warner’s assets would probably mesh well with those of CBS (excluding CNET, of course).

Photo: Portfolio

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