Time Warner Inc. Chief Executive Jeffrey Bewkes announced the decision in the company’s first-quarter earnings report, which showed strength in advertising sales on cable television networks like CNN and TBS, offset by a sharp fall in AOL’s revenue.
Investors have hoped that the media conglomerate, which owns about 84 percent of Time Warner Cable, could shed more assets to restructure as a pure content company so revenues could be easier to forecast.
“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,” Chief Executive Jeffrey Bewkes said in a statement. The structure and timing of the transaction were not disclosed.
Bewkes has already taken steps to revamp the company, which also owns Time Inc and the Warner Bros movie studios. Time Warner has held talks to merge its AOL online unit with Yahoo Inc to thwart Microsoft Corp’s bid for Yahoo, sources have said.
Investors will now focus on AOL as another target for divestiture, Marangi added.
Net profit fell 36 percent to $771 million, or 21 cents per share, from $1.2 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, per-share profit was 22 cents, a penny below expectations.
A restructuring charge at New Line, which was folded into the company’s Warner Bros studio, cut another $116 million from profits, or about 2 cents per share.
Revenue rose 2 percent to $11.42 billion, matching analysts’ estimates.
Adjusted operating income before depreciation and amortization, or OIBDA, fell 1 percent to $3.1 billion.
Time Warner shares fell 1 percent to $15.12 in early trading, while Time Warner Cable rose 1.2 percent to $27.96.
Revenue at its cable network division rose 10 percent to $2.7 billion, on a 10 percent increase in subscription revenue and a 13 percent jump in ad sales. For the first time in six years, CNN beat out News Corp’s Fox News in viewership among the 18-49 and 25-54 age groups, during the first quarter.