Time Warner Inc expected to lose a billion dollars

Time Warner Inc expects to lose billion dollars

The American multinational media corporation, Time Warner, might suffer from a huge financial loss. It is expected that the media giant would bear the burden of its poor deal to purchase television rights to Los Angeles Dodgers games by writing off its asset value to approximately hundred million dollars. The corporation and fans of Dodger games are suffering from a huge setback from West Coast TV distributors. These distributors have refused to provide their services of carrying the media firm’s service, SportsNet, which exclusively carries the Dodgers games.

Time Warner news reported that the company has been able to satisfy television rights owner, Guggenheim Partners, as they have agreed to receive $8.35 billion for a period of 25 years but has not been able to satisfy rival television operators. Due to the disagreement between the media corporation and television operator, 70% of the California based households have been deprived of games. The channel 21^st Century Fox is also a competitor for the Dodgers Television rights.

Time Warner testifies the market price. It is possible that the market price for the channel would be more than $3, meaning the charge would almost be $100 million when adjusted over the life of the deal. Time Warner Inc. refused to disclose the financial details of its controversial deal with Dodgers, but its Chief Financial Officer, Artie Minson, stated that the company’s second quarter 2014 earnings call for the re-forecasting of the firm’s operating income and revenue for the year.

It is expected that the controversial deal would play an important role in devaluing the stock price of the media company as the financial officer said that, on a full year basis, SportsNet LA would make the firm lose 50 basis points of revenue growth and 125 basis points of adjusted growth. Time news confirms the decline in market price of the shares of the mass media corporation by 2.9%.

This fall in price is most likely to benefit the American media firm, Comcast Corporation, as the corporation is interested in acquiring the Time Warner. Currently, is has offered 2.875 common shares for each media corporation’s share to the shareholders. At the official level, Time Warner Inc. has rejected the reports regarding the one billion dollar loss, as it continues to give an impression to the stock market that it is capable of paying them. Now it is yet to be seen that to what extent the this firm is able to resolve this crisis.