Time Warner Cable Spinoff Not Out of the Question, Incoming CEO Says

NEW YORK — Jeffrey Bewkes, the next Time Warner Inc. CEO, said Wednesday that the medley of companies at the world's largest media conglomerate may change in the future, and to improve performance he will consider "every option," including spinning off Time Warner Cable.

Bewkes' remarks at a Manhattan media industry conference came only hours after Time Warner reported quarterly results, with strong gains from its movie studio and cable TV businesses but weakness at the AOL Internet division.

Time Warner revenues rose 9 percent to $11.68 billion. Excluding special items, third-quarter earnings rose to 24 cents per share from 19 cents in the same period last year.

Time Warner announced Monday that Bewkes, 55, would replace current CEO Richard Parsons on Jan. 1, taking charge of the company behind media properties including networks CNN, HBO and TNT, the Warner Bros. film studio and the Time Inc. magazine family.

Many investors, frustrated by Time Warner's long-stagnant stock, have pinned their hopes on Bewkes, expecting him to reshape and slim down the company.

Bewkes, currently chief operating officer and president, is well regarded from his aggressive prior leadership of HBO.

Asked during a keynote interview Wednesday at the Dow Jones Media and Money conference here if he would make Time Warner's stock price rise, Bewkes had a simple answer: "Yes."

He said Time Warner will work to increase its competitive advantages and figure out how to "sneak up" on rivals.

Bewkes said that having a variety of media companies within Time Warner is beneficial and creates synergies, "but it doesn't mean you have to have it the way it is now."

Analysts and investors have speculated that the company may spin off or reduce its 84 percent stake in Time Warner Cable, the company's largest unit.

"Should you have a big, huge cable operating company, Time Warner Cable, in the same ownership structure as a content company and an online company?" Bewkes said. "It's a good question. It's one that we have and will continue to consider."

"Every option is on the table," he said. "We're not religious about whether we keep it this way or not."

However, he said, having the cable company within Time Warner has benefits. He said Time Warner Cable is one of the best customers for Time Warner channels such as HBO and TBS.

The cable division was a star of third-quarter results, with revenue rising 25 percent to $4 billion, boosted by acquisitions including the absorption of subscribers from bankrupt Adelphia Communications.

The results from film productions also were strong, thanks to movies such as the latest "Harry Potter" installment.

At AOL, revenue fell 38 percent to $1.2 billion as U.S. subscriber numbers shrank and the company sold its access businesses in the United Kingdom, France and Germany.

AOL has sought to transform itself from a dial-up access business into an online service supported by the hot online advertising market.

While advertising revenues rose 13 percent, it was not enough to offset the subscriber decline. AOL's number of U.S. subscribers in the quarter fell 851,000 to 10.1 million, down 5.1 million from the same period a year ago.

Despite these results, Bewkes said he was very optimistic about AOL and it makes sense for it to be part of Time Warner.

"It is a good business. It is a business with a tremendous future," he said.

Asked if AOL could better compete for online ads on its own, Bewkes said: "If it is, we'll do that, but at this point no, it is not being hindered by our support."

Bewkes said one of his most important career decisions was having AOL move to a free, ad-supported model knowing "that we had billions of dollars of (subscription) revenue and that we were going to move away from that."

Bewkes also praised CNN, calling it "the news source electronically that more people go to every day on more devices than any other."

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