AOL Time Warner and Disney Revive Talks on News Venture
Trying to conserve cash, AOL Time Warner and the Walt Disney Corporation have revived long-running talks about combining their CNN and ABC News operations into a joint venture in an effort to cut costs, people involved in the talks said yesterday.
Both companies are more motivated to reach an agreement than ever because they are suffering through a prolonged downturn in advertising sales while under pressure from investors and credit-rating agencies to pay down their debts. The discussions also take place at a time when the top executives of both AOL Time Warner and Disney are under particular pressure from shareholders and directors to improve their results.
...The preliminary terms of the deal under discussion call for Disney's ABC News division and AOL Time Warner's CNN division to merge into a joint venture, two-thirds owned by AOL Time Warner and one-third owned by Disney. People involved in the discussions said that CNN had annual revenue of about $1.6 billion and pretax profits of about $200 million, while ABC News had about $600 million in revenue and pretax profits of about $15 million, reflecting high costs and relatively less air time to sell advertisements.