Time Warner Shares Snap Six-Day Winning Streak Spurred by Takeover Talk

Jeffrey Bewkes - Interview in New York - 2009
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Rumors that Carl Icahn is accumuluating shares also may have affected the stock, but the billionaire investor told CNBC late Monday: "I don't own one share of Time Warner and it annoys me that certain speculators use my name to make profits."

After six days of gains — spurred in part by takeover rumors — shares of Time Warner dropped more than 2 percent on Monday.

Time Warner has been one of the few places for investors to make money so far this year, but the stock sold off on better than twice normal volume Monday as traders took profits and speculation that it could soon be acquired subsided.

Even after Monday's fall, Time Warner shares are up 7 percent in the past week while the S&P 500 is off more than 4 percent in the same time frame.

Four days ago, the New York Post said Corvex Management, run by Keith Meister, a former lieutenant of Carl Icahn, was pressuring Time Warner CEO Jeff Bewkes to sell the company or at least spin off HBO.

Reports that Icahn has been buying shares of Time Warner also may have contributed to the stock's run higher, but late Monday the billionaire investor told CNBC that those stories, published by some major news outlets, were false.

"I don't own one share of Time Warner and it annoys me that certain speculators use my name to make profits at the expense of other shareholders," Icahn told CNBC.

Beyond the Post's story, Benzinga reported on Jan. 8 that 21st Century Fox, which last year withdrew an unsolicited $80 billion bid for Time Warner, has now offered $105 a share for its rival, a whopping 51 percent above Monday's closing price of $69.61. Fox told The Hollywood Reporter at the time that the report was "categorically untrue." 

Bewkes recently signed on as CEO until 2020, and he's under pressure to get the stock moving higher after investors saw it sink 23 percent in 2015 amid a broad sell-off of media stocks as investors worried about cord-cutting.

The urgency at Time Warner, though, is unique, given that Bewkes has already spurned an offer from Fox for $85 a share, which is 22 percent higher than where the stock is now.

The Post also spoke of potential interest from Amazon.com, which would presumably like to control Time Warner's popular TV and movie content in order to beef up its Prime Instant Video offering that competes with Netflix and Hulu.

Amazon, though, already licenses older HBO content, such as The Sopranos and Boardwalk Empire, and observers don't see a benefit to acquiring the whole company when the two could simply broaden their already existing partnership. In fact, Jim Cramer's TheStreet.com cites Jackdaw Research analyst Jan Dawson likening an Amazon takeover of Time Warner to the disastrous AOL Time Warner merger that has since been unwound by Bewkes and his predecessor.

Also helping shares of Time Warner this past week was a prediction from Credit Suisse that the entertainment sector would rebound after 2015's poor showing. Credit Suisse analyst Omar Sheikh called Time Warner a "top pick" for U.S. media stocks in 2016, along with Fox and CBS.

Email: Paul.Bond@THR.com