Media companies have become collections of random assets — worth less than the sums of their parts, says financial columnist James Flanigan in the Los Angeles Times. He argues that media companies must slim down and focus on a single medium and decide whether they’re in the business of production or distribution.

The average return on invested capital over the last five years of the four major media firms — AOL Time Warner Inc., Walt Disney Co., News Corp. and Viacom Inc. — is less than 4% annually. (Vivendi Universal is excluded because it has no profit.)
That is laughably far below the 13% average return on capital for all large U.S. companies in the same period, as measured by Forbes magazine.

William Safire goes further, saying that even if they decide to focus, media giants should not be permitted to dominate their industries. Safire’s libertarian brand of Republicanism is at odds with the current regime’s pro-corporate, anti-civil liberties Republicanism:

Does this make me (gasp!) pro-regulation? Michael Powell, appointed by Bush to be F.C.C. chairman, likes to say “the market is my religion.” My conservative economic religion is founded on the rock of competition, which — since Teddy Roosevelt’s day — has protected small business and consumers against predatory pricing leading to market monopolization.

Flanigan and Safire help make the case that in addition to being bad for democracy and for consumers (reason enough to break up the media giants), the current trend toward gigantism is bad for stockholders.
Now that Steve Case is an a mere (albeit big) stockholder and no longer a manager at AOL Time Warner, he should insist on breaking up the company.