By DPA,
New York : Time Warner, the world’s largest media company, said Wednesday that it planned to divest its lucrative cable TV unit as first quarter profits slid by 36 percent to $771 million.
“Our results this quarter, particularly the underlying operating strength at our cable, networks and filmed-entertainment businesses, gave us the confidence to reaffirm our full-year business outlook,” chief executive officer Jeff Bewkes said in a statement.
“We’ve decided that a complete structural separation of Time Warner Cable, under the right circumstances, is in the best interests of both companies’ shareholders. We’re working hard on an agreement with Time Warner Cable, which we expect to finalize soon,” he said.
Time Warner owns 84 percent of Time Warner cable but has come under pressure to sell its stake in order to focus on its entertainment businesses and a turnaround at the AOL internet unit.
Analysts said that proceeds from the sale could allow the company to repurchase some $4 billion in stock and significantly boost its share price.
The announcement came as Time Warner reported that first-quarter net income fell by 36 percent to $ 771 million, or 21 cents a share, from $1.2 billion , or 31 cents, a year earlier. Sales rose 2.1 percent to $11.4 billion, the New York-based company said in a statement.
Revenue rose 2 percent to $11.42 billion from $11.18 billion on improved results at Time Warner Cable and its filmed entertainment business.
Sales at Time Warner Cable rose 8 percent to $4.16 billion but the unit’s net income declined 12 percent to $242 million after marketing costs rose and the company recorded a gain from an asset sale a year earlier.
However AOL continued to disappoint as lackluster ad sales failed to compensate for the continued decline in internet accesssubscribers. AOL lost 647,000 Internet-access subscribers during the quarter, bringing the user base at the end of March to 8.7 million. The business has lost more than half of its customers in the past two years.
Profits at the company’s film unit fell 25 percent to $183 million on costs related to merging the New Line Cinema film studiowith Warner Bros. But sales increased 3.5 percent to $2.84 billion.
Profit at the cable-TV networks group, which includes TBS and HBO, rose 1.6 percent to $874 million on a 10 percent rise in sales to $2.66 billion.
Earnings at the publishing unit that includes Time Magazine and People more than doubled to $93 million as revenue grew 73 percent to $145 million dollars.