Seth Sutel
April 30, 2008 - 09:14 a.m.
NEW YORK (AP) - Time Warner Inc. said Wednesday it will spin off the rest of its cable TV business, a widely anticipated move after months of pressure from investors.
The news came as the company, which also owns Warner Bros., CNN, AOL and Time magazine, reported a 36 percent decline in first-quarter earnings from a year ago, when it had a gain from the sale of AOL's Internet access business in Germany. The results were mainly in line with expectations.
Time Warner's cable unit became a separately traded public company just over a year ago, but the company held on to an 84 percent stake.
Time Warner Cable is the second-largest cable TV operator in the country after Comcast Corp. and is the largest operating unit of Time Warner, the world's largest media conglomerate.
Time Warner's CEO Jeff Bewkes had promised a decision on the cable business this month when he made his first earnings report to investors in February.
The company didn't offer specific details on how or when the spinoff would be completed, but Bewkes said in a announcement that Time Warner was working closely with the board of Time Warner Cable and expected a final agreement soon.
Investors have long pressed Time Warner to simplify its sprawling corporate structure, and a spinoff of Time Warner Cable was high on their wish list.
Time Warner provided no update, however, on another major investor concern, the future of AOL. That unit has been struggling with losses of Internet access subscribers and is trying to remake itself into an online advertising business.
AOL reported more weak quarterly results that included a 25 percent decline in profit. Revenues fell 23 percent, as diminishing subscription fees more than outweighed a 1 percent arrive at in online advertising.
Wall Street has also pressed Time Warner to decide what to do with AOL, and in February Bewkes announced that AOL would begin to separate its faltering Internet access business from its growing advertising operation, which could foreshow a sale of one or both units.
AOL's ultimate fate has been complicated further by Microsoft Corp.'s unsolicited offer to buy Internet pioneer Yahoo Inc.
A combination of Microsoft and Yahoo would remove two likely suitors for AOL, and AOL has also been contemplating some style of combination with Yahoo.