Time Warner Inc.’s new CEO, Jeff Bewkes, made good today on his recent pledge to improve the company’s performance. He said the media giant will sell its cable division, which reported lower first-quarter 2008 income after Bewkes’ announcement.
Bewkes said Time Warner is working on a spin-off deal, but gave no other details. Analysts were receptive to a sale of the cable unit but said Time Warner still has to deal with the AOL albatross, and boost margins in the music and film branches.
Time Warner Cable stocks were up 15 cents during early trading, to $27.77.
Overall, Time Warner Cable on Wednesday reported net income of $242 million, or 25 cents per share, compared to $276 million in the first quarter of 2007, 28 cents per share. The disparity came from gains recorded a year ago from the sale of Texas and Kansas City Cable Partners assets.
Sales, however, grew 8 percent to reach $4.2 billion. More cable subscribers opted for digital video channels even as Time Warner Cable also increased pay TV prices. Broadband adoption pushed up revenue, too. Sales of high-speed Internet access rose 11 percent to $1 billion. At the same time, VoIP sales jumped 39 percent to $366 million.
For parent company Time Warner, Internet access growth didn’t translate into the dial-up world. Income at AOL plummeted 74 percent as sales fell 23 percent. AOL lost 28 percent of its customers, retaining a total of 8.7 million, a decline that started after AOL made most of its services free.
Time Warner Cable executives were not able to take questions on the spinoff news during their conference call with analysts, so it remained unknown how a sale will affect the company’s new national agent program.