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Time Warner considers Braves sale
Media conglomerate hires investment bank to consider sale of Braves, Turner South cable network.
December 14, 2005: 9:04 AM EST
By Chris Isidore, CNNMoney.com senior writer
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NEW YORK (CNNMoney.com) - Time Warner is exploring a sale of the Atlanta Braves and one of its cable networks that carries many of the teams' games.

Phil Kent, chairman of Turner Broadcasting System, the unit of the media conglomerate that oversees the baseball team, announced in a statement to employees Tuesday night that he had "engaged an investment banking firm to help us assess strategic options for Turner South and a significant programming contributor to that network, the Atlanta Braves franchise."

The possible sale comes as Time Warner (Research) is under pressure from financier Carl Icahn and a group of major shareholders to increase its stagnant share value and possibly break up the company into four parts.

Kent's statement did not give a reason for the possible sale other than to say, "As a publicly held company, we have a duty to our shareholders to operate in the most effective, efficient, fiscally responsible manner possible. That duty ... may also include making strategic changes to the portfolio of assets that comprise Turner Broadcasting."

While Icahn, who has announced plans to wage a proxy fight to replace Time Warner board members, Tuesday endorsed the idea of splitting Time Warner into four separate companies -- one each for its Internet, cable and print operations, with the fourth including its networks and film studios, including Turner Broadcasting.

But he has also criticized current management for some of its past asset sales, referring to them as "fire sales."

The announcement of a possible sale comes on the same day that Time Warner's print unit, Time Inc., announced it was laying off 105 employees, including some senior executives, in an effort to reduce costs and streamline its management structure.

Braves successful on and off field

The company sold two other Atlanta sports teams, the National Basketball Association's Hawks and the National Hockey League's Thrashers, for $250 million in September 2003, at a time the corporation was selling assets in an attempt to pay down debt.

But those two teams were sold at a somewhat distressed price, with the company then known as AOL Time Warner taking a $178 million charge to write down their value. They were also sold at a time that the market was relatively flooded with pro teams for sale, particularly in the NHL.

Two other media conglomerates, Walt Disney Co. (Research) and Fox Entertainment Group (Research), have sold baseball teams within the last three years.

The Braves are by far the most valuable and successful of the three. It has won 14 straight division titles, although it has only won one World Series championship during that period, and it has been eliminated in the first round of the playoffs the last four years and five of the six seasons since its 1999 World Series loss.

Still, the team has won while trimming nearly $20 million, or about 19 percent, off its payroll the last two seasons while seeing attendance rise 5 percent during that time. The team is likely profitable, especially if packaged with the Turner South cable network that carries many of its games.

Several smaller-revenue teams have fetched strong prices in recent years. Forbes, which tracks team valuations and economics, puts the Braves' value at $382 million this past April, making it the eighth most valuable team. The magazine also estimates it had operating income of $15.4 million in 2004, making it the seventh most profitable team, and that it had the second lowest debt-to-value ratio.

The team may fetch more than that estimated valuation in the current market. The Washington Nationals, whose sale is expected to be announced soon, are expected to sell for more than $400 million, even though the Forbes estimate put that team's value at $310 million in April.

Baseball teams are relatively flush with money right now due to new rights deals with ESPN and XM Satellite Radio and increased income from MLB Advance Media, the game's Internet unit. They are expected to see additional cash with the upcoming sale of the Washington Nationals, which is owned by the other 29 teams.

CNNMoney.com is a unit of Time Warner and Turner Broadcasting.

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For more on Major League Baseball's current financial success, click here.

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