CEO jettisons Time Warner's cable unit

In an effort to better situate its struggling cable unit, Time Warner CEO Jeff Bewkes announced that Time Warner Cable will be spun off into a separate company.

“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,” said Bewkes. “We're working hard on an agreement with Time Warner Cable, which we expect to finalize soon.”

CNN Money reports that the Time Warner will execute the spinoff of its cable unit by giving its 84% stake in the cable unit to shareholders.

Some analysts predicted a cable divestment by Time Warner, due to its stakeholders’ desire to simply its “sprawling corporate structure.” Last year, the media conglomerate offered 16% of the company up for sale in an IPO, which analysts valued at $5.5 billion.

With Time Warner’s share price sagging at 2003 levels – it had a brief spike at the beginning of 2007 – Bewkes is faced with a tough burden, manifesting as three separate tasks: figuring out what to with Time Warner Cable is one of them, along with jumpstarting the company’s AOL unit and improving its entertainment businesses. In the recent past, analyst murmurs predicted that the company would look to sell off its AOL unit completely – despite Time Warner’s statements to the contrary.

In any case, a decision to jettison Time Warner Cable is only the latest in a series of corporate restructures, which include a substantial $116 million reorganization of New Line Cinema. 

Time Warner Cable is the United States’ second largest ISP, trailing only behind Comcast. Aside from a minor spat with Verizon over its characterizations of Verizon’s FiOS service, the cable giant has largely avoided the public spotlight – unlike its larger competitor, which is continually finding itself in a wrestling match with critics, the FCC, and the ISP industry as a whole.

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