Bronte Media

Maybe I just wanted to write that headline but people should really stop thinking about what a combined AOL-Google-Comcast or AOL-MSN might look like and think a little shorter term.

Out of all of this the only person who will end up ahead is AOL (the whore). Here is the game theory run down:

Carl Icahn is pressuring the Time Warner board over its share price, wanting it to spinoff its cable division and maybe AOL.

The way to make Carl go away is to lift the share price of Time Warner. This will let him make money and the shareholders who are doggedly holding on to the stock. By whoring out AOL to any and every suitor they have a very good chance of lifting the share price without even selling it. They can do this by ‘establishing’ a fair price of AOL amongst the industry rather than Wall St.

If one of the suitors is silly enough to make a too-much bid (valuing AOL media at anything more than $8-10bn for instance) then they can take the money and run. And only if they still have control of AOL.

MSN, Google and Comcast have no chance of winning. They only way they will ‘win’ is if they will over pay. A classic winner’s curse. Once they make a credible bid, then the Time Warner stock price will rise and Richard Parsons can tell them to go away or add in even more onerous terms.

The only thing Time Warner cares about is getting its stock price up to ‘fair value’. If Microsoft, Google or Comcast need to used in that endevor then so be it. Carl, who actually serves as a useful capitalism mechanism, then goes away. And then AOL succeeds or fails on its own merits.