Time Warner Inc.(TWX) is the world’s largest media company. The media conglomerate owns several profitable media properties including HBO, Time Inc, Turner Broadcasting System, The CW, Warner Bros, CNN, Cartoon Network, Castle Rock Entertainment, DC Comics, Warner Bros. Games, New Line Television, New Line Cinema, and Boomerang. Time Warner owns several large commercial properties as well. The company has been around since 1972 when it was known as Warner Communication

The company’s chief competition comes from other media networks. Disney, Viacom, CBS, NBC, and General Electric are all competitors. Media companies have very little price control since the competition for ad dollars is so intense. The Internet, smart phones, and personal computers are all competing for the same ad revenue.

Shares of Time Warner have been held down for years by the company’s failed merger with AOL Inc in 2001. The conglomerate’s revenues, operating margins, and income have all suffered over the past decade. Revenues have declined 4% per annum over the past five years. The Time Warner-AOL merger is widely considered the worst merger in corporate history. Now that the company has finally shed itself of the AOL albatross, things are looking up for Time Warner.

Earnings are up 27% for the current year and revenue is on pace for 3% growth. Operating margins are high at 21% which is nearly two times the industry average. Gross margins are higher than competitors at 45%. The primary negative is that Time Warner has a heavy debt load from its acquisitions. Time Warner assumed all of the debt from AOL when the company spun off the former search giant last year. The company has $4.2 billion dollars in cash and $16.5 billion dollars in debt. Time Warner has generated over $3 billion dollars in free cash flow.

Shares currently trade at 14 times earnings which is lower than both CBS and Disney.

Investors are also getting a decent dividend of $85 cents per share. This is a 2.9% dividend yield. This is slightly higher than the average dividend yield of 2.3%. The current payout is just 39% of earnings which is easily maintainable for Time Warner. The company recently increased its dividend 13% and has instituted a stock repurchase program. This is always a good thing for investors.

Shares look like a decent buy at their current price of $31.72. This is just barely over 1 times book value and 1 times price to earnings growth. Time is worth one tenth of the value of the $350 billion dollar behemoth that it once was. This is a good thing. Now that the company is no longer burdened down by AOL, the company could easily achieve double digit earnings growth over the next few years. Time has a number of valuable media properties that can provide consistent income for years to come.