The giant Time Warner implosion starts now with the move to split off its growing cable division and use the capital to buy back shares. While the cable business brought some stability to Time Warner’s bottom line, it’s an awkward asset for a content company to hold onto, especially if the content side of the business is thinking about divestitures. And so it begins.
The nation’s second-largest cable operator will be the first to go. CEO Jeff Bewkes said today that Time Warner would split off the remaining 84 percent of its cable division with details to be worked out later. Then we’ll look for a spin out or sale of the diminishing AOL access line business, which Time Warner plans to separate from the flailing Platform A advertising business.
The logical next step is a retreat from the publishing world with magazines such as Fortune, People and Time going on the block. What will be left are the movie businesses, including Warner Bros. and New Line Cinema, and cable TV properties such as HBO and TBS. Those units brought in sales of $5.5 billion during the quarter but are under continued pressure from the Internet. Like an aging matron, Time Warner appears to be taking refuge in the arms of old Hollywood.
5 trackbacks so far
8:12 AM PT
[...] largest in the country (our pal Stacey at GigaOM says its the beginning of Time Warner’s death by 1,000 cuts). But the other, not-quite-as-big-but-still-big news from the earnings call was that Time Warner [...]
10:34 PM PT
[...] Time Warner Begins Death by 1,000 Cuts - GigaOM “Like an aging matron, Time Warner appears to be taking refuge in the arms of old Hollywood.” (tags: time media business enterprise internet AOL) [...]
3:27 AM PT
[...] GigaOm: Time Warner Begins Death by 1,000 Cuts [...]
6:50 AM PT
[...] there, after cutting 450 New Line jobs as it folds the brand into Warner Bros. Jeff Bewkes is also splitting from its cable division. And the company’s HBO unit is even hiking prices on iTunes downloads to [...]
6:49 AM PT
[...] May 21, 2008 at 6:49 AM PT Comments (0) Executives at Time Warner concerned with how to spin out its Time Warner Cable division seemed to believe that saddling a cash-generating business in an [...]
3 comments so far
7:57 AM PT
Don’t understand why “the logical next step” is to divest magazines (pure content biz with strong online presence). Big difference between that and access (cable/dialup).
8:09 AM PT
Way back in 1997, I thought TW would “own” the Internet. If you look at its site: (link) (at one time it was operational), you’ll see TW has a lot of content. Unfortunately, it never parlayed it into an Internet powerhouse.
I guess this proves that content is not necessarily King.
11:43 AM PT
“flailing Platform A advertising business”? Come on, don’t shoot just coz you have to! Give the company some time to get its act together in the ad space? How long did it take google to get Adsense going completely well?
AOL has TW legacy and bosses to please. Pity the 2001 merger even happened!
AOL is in the right track. Just give them time. And with MicroHoo happening, it is a good opp for them to shape up too!
I, for one, would wait and watch.
-D
(link)
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