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Time-Warner confirms cable arm demerger

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Date: Wednesday 30 Apr 2008

LONDON (ShareCast) - US media company Time-Warner confirmed today that it will hive off its majority-owned cable unit, Time-Warner Cable, though it said it was not yet in a position to give precise details of how this would be achieved.

Jeff Bewkes, who took over as chief executive of Time-Warner at the beginning of the year with a remit to refashion the company, said the company had “decided that a complete structural separation of Time-Warner Cable, under the right circumstances, is in the best interests of both companies' shareholders.”

Time-Warner owns an 84% stake in Time-Warner Cable. The cable company today announced a 12% dip in first quarter net income to $242m from $276m a year earlier. Earnings per share at 25 cents were 3 cents higher than analysts had been expecting.

The demerger announcement accompanied Time-Warner’s own first quarter results which showed a 36% slide in net income to $771m, or 21 cents a share. Sales climbed 2.1% to $11.42bn.

Earnings at its AOL unit slumped 74% on revenue that was down 23%. AOL has struggled in the era of growing adoption of broadband internet services; Time-Warner intends to separate AOL’s internet service provider business from its internet portal and advertising business in a move which many observers see as a prelude to a possible sale of some or all parts of AOL.