Someone at Time Warner (NYSE: TWX) finally lit a fire under CEO Dick Parsons about filling a big strategic gap at the world's biggest media company: wireless services.
Fresh from a bruising fight with uber-investor Carl Icahn, who was persuaded by a bundle of concessions to abandon plans to seize control of Time Warner and oust Parsons, the CEO told the Financial Times that his cable division would soon concentrate on finding ways to bulk up its wireless business. The company is already a major force in video, Internet, and telephony services.
Time Warner currently offers wireless services through a partnership with Sprint Nextel (NYSE: S), as do other cable groups. "The Sprint partnership is meaningful and a good way for us to participate in and learn about the wireless market," Parsons told the newspaper.
Here's a recent example: The company's AOL division just announced that it will begin bringing its mobile Web portal services to Sprint subscribers nationwide. The service is billed as a one-stop-shop that gives mobile users easy access to newly enhanced mobile AOL instant messaging, email, and photo services, as well as news, entertainment, sports, and weather content.
Market forces seem to be with Time Warner. AOL cites a new survey it conducted with the Associated Press and the Pew Research Center, which found that 52% of adults keep their cell phone turned on all day, every day, and 40% of those aged 18-29 are likely to drop their land line once and for all. The report also reveals that more than 30% of adults want to search and browse the Web from their cell phone, while 47% say that mobile maps and driving directions are a "must have" on the next phone they buy.
Parsons suggested that the company would increase its presence in the wireless business either by acquiring other firms or purchasing wireless spectrum. Parsons knows, however, that U.S. acquisition opportunities are limited, since the market is dominated by large players such as AT&T (NYSE: T) and Verizon (NYSE: VZ). A few industry analysts have speculated that T-Mobile USA could be for sale, but its parent Deutsche Telekom (NYSE: DT) appears reluctant to relinquish its American foothold.
If the Parsons can figure out how to access the wireless business more directly, Time Warner won't have to rely on partners for expanding market share. Ultimately, this could be great news for consumers, but it may drive off some investors wary of a slugfest in the mobile phone sector.
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Fool contributor
David Compton
can text faster than anyone else over the age of 25. At the time of publication, he held no financial position in any companies mentioned in this article. The Motley Fool has a disclosure policy.
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