Time Warner plans cable services split

Time Warner Inc said on Wednesday that it would completely split off its cable services division, as the one-time world's biggest media company restructures to try to lift its sluggish stock price.

Chief Executive Jeffrey Bewkes has already taken steps to revamp the company, which also owns Time Inc and the Warner Bros movie studios. Sources have said Time Warner had held discussions to merge its AOL online unit with Yahoo Inc.

"We've decided that a complete structural separation of Time Warner Cable, under the right circumstances is in the best interest of both companies' shareholders," Bewkes said in a statement.

Time Warner currently owns about 84 per cent of Time Warner Cable.

Time Warner's first-quarter earnings just missed Wall Street expectations as sluggish advertising sales at AOL offset gains at Turner cable networks and at the cable services division's digital phone and broadband services.

Net profit fell 36 per cent to $771 million (Dh2.84 billion), or 21 cents per share, from $1.2 billion (Dh4.42 billion), or 30 cents per share, a year earlier, when the company booked a big gain from the sale of AOL's Internet access business in Germany and the unwinding of its cable partnership with Comcast Corp.

Excluding an impairment charge for an investment in video game developer SCi Entertainment Group, profit was 22 cents per share, a penny below Wall Street forecasts compiled by Reuters Estimates.

Revenue rose 2 per cent to $11.42 billion (Dh42 billion), matching analysts' estimates.

Adjusted operating income before depreciation and amortisation, or OIBDA, fell 1 per cent to $3.1 billion (Dh11.41 billion), which includes a $116 million (Dh426.88 million) restructuring charge from New Line Cinema.

AOL's quarterly revenue fell 23 per cent to $1.1 billion (Dh4.05 billion), and adjusted OIBDA fell 25 per cent to $405 million (Dh1.5 billion), due to lower subscription revenue. Online advertising rose 1 per cent.

Cable services revenue rose 8 per cent to $4.2 billion (Dh15.46 billion), while OIBDA rose 7 per cent to $1.4 billion (Dh5.15 billion). The division added 55,000 net additional new basic video subscribers in the quarter.

Time Warner stock has lost a third of its value since the beginning of 2007 as AOL's future continues to worry investors, who have also sent shares in the entire media-sector lower on fears of an advertising recession. News Corp stock has fallen about 19 per cent over the same period.

For the full year, Time Warner affirmed an earlier earnings forecast of $1.07 to $1.11 per share from continuing operations. It also still expects adjusted OIBDA to rise 7 per cent to 9 per cent from a base of $12.9 billion (Dh47.5 billion) in 2007. (Reuters)

Follow Emirates 24|7 on Google News.