OK Gang:

Well, I,ve been crunching numbers all day, and haven,t yet gotten to the 
writing.  I've attached Dylan's original responses for reference.  Figure 
it'll be a memo from Time's CEO to the Time Board.

I,ve leaving now for Mendocino, but will be back early tomorrow to finish 
this up.  Please check out the spreadsheet.

The case is sort of confusing*how do Time,s analysts value Time at $189-212, 
when they,re trading at 109 the day before the announcement of the deal with 
Warner.  That doesn,t jive.  Are they saying that, absent synergies, the 
combined Time/Warner is worth the enterprise value of Time at 189-212 plus 
the enterprise value of Warner at $63-71 (again, the analysts valuation)?  
That just seems ridiculous, give where they,re trading.

Anyway, here,s where my analysis is heading----tell me if I,m smoking crack.

The deal isn,t really $175 per share.  It,s $175 LESS the taxes that will 
have to paid (since it,s a purchase deal) PLUS the value of the tax shield 
created by the net increase of $8.9B in new debt that Paramount will take 
on.  Does this seem right?  Could folks look at my spreadsheet?  I,ve got it 
conceptually set up, but I,m not quite sure how to calculate the taxes paid 
under the purchase method or the value of the tax shield (assuming that this 
is correct.  If I,m just completely out of it with this angle, just let me 
know.  In any case, seems that there,s some value in the tax-free 
(Time-Warner) versus the taxable (Time-Paramount) deals.  Presumably, we 
could take the total enterprise value of Time-Warner (nontaxed) and compared 
it to the total enterprise of Paramount-Time (taxed) and compare the two.  I,
ve got a hunch that the Time-Warner number may win the day, but I haven,t 
gotten that far in the crunching yet.

In any case, I,ll be back around Noon tomorrow and will crank the puppy out.

Best,
Jeff