Google tops Time Warner

June 9, 2005 at 04:50 PM

Google tops Time Warner as Street's top media stock

LOS ANGELES (Hollywood Reporter) - Wall Street has determined that Google Inc. is the most valuable media company on the planet.

Shares of the company, which went public in August at $75, rose $10.68 on Monday to close at $290.94, giving the new-media youngster a market capitalization of $80.8 billion, according to Yahoo! Finance.

Meanwhile, shares of Time Warner Inc., which until Monday was considered the world's biggest media company, dropped 23 cents to $17.02, giving the company a $79.8 billion market cap.

Google's stock performance has been extraordinary of late, harkening back to the Internet bubble days, with one important difference: profit. An analyst with RBC Capital Markets said Google could earn about $1 billion this year and more than $2.5 billion in 2007.

Even before Monday's rise of Google shares, pundits were noting the runaway nature of the company's market cap, making such observations as Google being worth more than the Walt Disney Co. and General Motors Corp. combined or more than the combined value of Dow Jones & Co. and the New York Times Co.

That Google's worth would cruise past that of TW is ironic because the latter sports an asset that once was considered the gold standard of the Internet -- America Online.

In January 2000, when TW said it would merge with the world's most richly valued new-media company at the time, AOL had a market cap that towered over TW, the world's most richly valued traditional media company, by $164 billion to $83 billion.

TW today is worth less with AOL than it was worth without it, prompting some analysts to posit that -- in light of Wall Street valuing what is now a very profitable AOL as an asset worth somewhere between zero and just $8 billion -- it might be time to buy TW shares again.

Of course, market caps are fluid, and any downturn in Google shares -- or uptick in TW's -- could easily make Google the world's second-biggest media company.

Revenue is another measure of a company's size. By that standard, Time Warner, with about $42.4 billion in annual revenue, dwarfs Google's roughly $3.8 billion yearly revenue.