Time Warner has decided to sell its cable operation even as it struggles to correct its ailing America Online unit, CEO Jeff Bewkes announced in the company’s quarterly earnings call Wednesday. On the positive side, income from the company’s cable networks and film operations offset a whopping 23 percent decline at AOL.
“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,” Bewkes said. “We feel these companies would be better off separated than they are together.”
The move was not unexpected. In an open letter to shareholders, Bewkes previously tipped his hand, saying, “As the industry evolves, Time Warner Cable has increasingly different capital and financial needs than our other businesses.”
Asked why the separation was taking so long, Bewkes said, “It’s not taking long and there are tricky governance issues involved.”
AOL Restructuring
AOL, long ago the No. 1 Internet brand, saw revenues and profits plummet in the first quarter. Profits were down 25 percent and revenues decreased 23 percent. Bewkes promised to complete the restructuring necessary to separate AOL’s dial-up and advertising businesses.
“We were not satisfied with the performance of display advertising on our owned and operated inventory,” Bewkes said of AOL. He pointed to problems with integrating its Platform A advertising unit. “We didn’t integrate Platform A fast enough, and that created a sales-channel conflict. We have moved quickly to resolve this,” he said. “We are creating one sales team able and motivated to sell across all of Platform A.”
The result will be continuing bad news from AOL until the restructuring is complete, he said. Essentially, AOL has several different sales forces in place from various acquisitions and has taken longer to integrate them all. “We had not put them together yet. We missed some opportunities…
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