Time Warner’s Pace: We’ll Look at Adelphia

Time Warner Inc. chief financial officer Wayne Pace dodged questions about possible acquisitions at an industry conference Thursday, but he added that the media giant will look at all opportunities.

Just a few months removed from a capital restructuring that pared down its debt from $20 billion to $16 billion and flush with free cash flow, Time Warner has reportedly been interested in acquiring film and television studio Metro-Goldwyn Mayer Inc., and it has been named as a possible bidder for Adelphia Communications Corp.

Speaking at the Morgan Stanley Media & Communications conference in Washington, D.C., Pace said it was too early to tell what Time Warner would do on the acquisition front.

“It’s inappropriate right now, in any transaction, to talk about it ahead of its time,” he said at the conference. “We like every single business we’re in. We’re looking to not only grow them through reinvestment, but also to look for external acquisitions in every single business we’re in.”

Some press reports have said Time Warner is willing to pay as much as $4.6 billion for MGM -- $2.6 billion in cash and the assumption of $2 billion in MGM debt. The company has some competition in Sony Corp., which is also interested in the MGM assets. According to several reports, Sony’s offer is larger, at $4.8 billion, but it is more complicated.

Concerning Adelphia, Pace said Time Warner would look at the Denver-based cable company’s assets, but nothing has been done so far.

“We’ve done no due diligence on Adelphia,” he added. “We will take a very hard look at Adelphia’s business when the materials are available. But we’re going to protect our balance sheet.”

Time Warner can’t issue its own stock in any deal due to an ongoing investigation into questionable accounting practices at its America Online Inc. unit. But Pace said there are other ways to do deals.

“With regard to Adelphia, you’ve read and even heard [Time Warner chairman and CEO] Dick [Parsons] talk a little bit about that one way might be to give up equity in our cable company to the public shareholders of another company through this approach that is like a reverse merger,” Pace said.

“But any of that has to be balanced against our commitment to a strong balance sheet and balanced against our commitment that any investment has to pass our own rigorous internal return on investment analysis or we’ll walk away from it,” he added.