Time Warner made the formal announcement Wednesday that it will split off Time Warner
Cable, the second-largest cable operation in the country behind Comcast. Time Warner
CEO Jeff Bewkes, in a conference call with analysts, said that the company had become
a "full-fledged telecommunications business" that includes cable, Internet access,
and phone services that no longer fits well with Time Warner's traditional media
companies, which include the Warner Bros. film studios, publishers Time Inc., and
Turner Broadcasting. It also owns AOL -- another company that it is likely to dispose
of. In order for the split to occur, Time Warner Cable will have to borrow $10.9
billion for a one-time dividend -- $9.25 billion of that amount payable to Time Warner,
for its 84-percent ownership. Reporting on the development, the Wall Street Journal
noted, "Loading up a spinoff with lots of debt has had bad consequences in the
past." On the other hand, it said, "Time Warner itself is making out like a bandit
on the deal, slashing its net debt by two-thirds."
22/05/2008
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