Time Warner Reliving Its 20s

Roben Farzad

Today, shares of Time Warner (TWX) finally closed above $20, a resistance level that has frustrated the media conglomerate for more than four years. Can this bubble-cursed stock (which once traded at $83) finally get some traction? Two things to watch:

1. Can Time Warner finally hold its nose and ditch AOL, its declining ISP-portal -- AKA the most destructive three letters in TW's publicly traded history? Time Warner's own Fortune recently reported that Yahoo! (YHOO) is interested in restarting AOL acquisition talks with Time Warner management. These '06 Net wallflowers have serious incentive to hook up. Question is, what can TW get for its festering albatross?

2. Cable. Cable. Cable. Scary installation guys notwithstanding, it's the best thing Time Warner has going for it...particularly with the Sopranos and Deadwood finales still a ways off. Analysts estimate that Time Warner Cable will be the conglom's fastest-growing unit for the 11th consecutive quarter, with a revenue surge of 33%, thanks chiefly to phone and Internet gains.

Time Warner's upcoming massive IPO of its $40 billion (valued) cable business -- the country's second largest -- will finally sate Adelphia creditors. Time Warner has been eager to get this ornery bunch off its back ever since it announced its acquisition of much of defunct Adelphia in April 2005. And with cable multiples soaring after four dry years, the offering (likely to be oversubscribed) stands to inject badly needed mojo into Time Warner shares.

Investors, at least, are betting 20 bucks that it will.

Before it's here, it's on the Bloomberg Terminal.