Time Warner boss to split AOL in two

7 Feb 2008

Jeff Bewkes, the incoming chief executive officer at Time Warner, has set out his ambitious plans for the group, including hiving off AOL’s online access and advertising operations and possibly selling off the company’s remaining cable assets. Bewkes, who was brought in last month to reverse a worrying dip in fortunes for Time Warner whose shares have slumped 29% in the last year, made his announcement to a group of analysts as he unveiled the company’s fourth-quarter earnings. Net income fell 41% to USD1.03 billion, compared with USD1.75 billion for the same period a year ago. Revenues climbed 2% to USD12.64 billion, broadly in line with the USD12.65 billion forecast of industry analysts. Time Warner recorded a 19% rise in net income on the back of 12% revenue growth, it said. Nonetheless, growth in premium cable services such as digital voice telephony and broadband internet access were tempered by concerns over the company’s ability to compete with rivals offering video-on-demand products. In the three months to 31 December, Time Warner said its basic video subscriber base saw a drop of 50,000 users.

AOL’s fourth-quarter net income climbed 29% year-on-year, despite a 32% fall in revenues as the unit shipped a further 750,000 dial-up users to rival providers. AOL had 9.3 million subscribers by the end of the year, down 3.8 million on a year earlier. It offloaded its UK and French internet businesses last year for a pre-tax gain of USD769 million.

United States, Time Warner Cable (Spectrum)