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Time Warner May Spin Off Cable TV Business

6:25 am on May 1, 2008 | Category: Business, Corporate, Television, Web Services

Time Warner CEO, Jeffrey Bewkes, took a step towards breaking up the media and entertainment giant yesterday, tentatively announcing plans to separate Time Warner Cable from the company’s film and television empire.

“Under the right circumstances, a complete structural separation is in the best interests of Time Warner and Time Warner Cable shareholders,” Bewkes said in a conference call. “We’re taking the right steps to deliver increasing shareholder value.”

Time Warner also announced a 36% decline in first-quarter net income, with profits sagging to $771 million, from $1.2 billion in the first three months of 2007, despite a 2.1% increase in quarterly revenue.

While most analysts agree that a spin off of Time Warner’s cable division could be beneficial, it is clear that the company must improve the fortunes of its media and advertising businesses to make such a move a success.

AOL in particular, whose profits plunged 74% in the first quarter, will undoubtedly need a boost. The once-great internet giant continues to lose dialup internet customers at an alarming rate, while its advertising business remains stagnant, showing just 1% growth in the first quarter.

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