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Time Warner Inc. chief executive Jeff Bewkes revealed Wednesday that the media company will split up poorly  performing Internet access segment of its AOL group, eliminate 100 jobs and look at ridding itself of portions of its cable television unit over the next several months. The plan, which calls for the creation of a new AOL unit that will focus on Internet advertising, comes alongside the release of Time Warner's financial results for both the full year and fourth quarter ending December 31, 2007. AOL Losing Customers Time Warner, which has seen its stock fall 29 percent during the past year, makes these moves to increase the firm's value "on a long-term basis," said Bewkes, 55, who took over the position from Richard Parsons on January 1, during a conference call with investors. Time Warner, the world's largest media conglomerate, forecast 2008 earnings rising by up to nine percent. AOL's traditional dial-up Internet access service lost 740,000 customers during the fourth quarter, and saw sales fall 32 percent. Billionaire Barry Diller, the chief executive and chairman of IAC/InterActiveCorp, had at one time made his  interest in buying Time Warner's AOL division known, however by Wednesday his feelings towards a possible purchase had changed. "I don't really feel the same way now," Diller told Wall Street analysts during a conference call. "If AOL came down in price to something ridiculous, we probably would look at it. I just doubt we have very much interest in it," Diller added. Bewkes plan to separate AOL's Internet access business from its Web portal and advertising business has caused speculation that Time Warner may sell of spin off AOL's traditional access business that has seen sharp drops in subscribers. Revenue from display advertising at AOL increased slightly during the fourth quarter, rising three percent. Time Warner executives expect AOL advertising revenue to remain flat during the present quarter and grow slightly in the second quarter. Bewkes sees the move to split AOL as a way to explore new options for reviving the group's past glory. "This should significantly increase AOL's strategic options," Bewkes said. Earnings Figures Mixed During the fourth quarter Time Warner net income fell to $1.03 billion from $1.75 billion a year earlier, when it recorded asset sale and tax gains. Sales climbed to $12.6 billion according to a statement released by the firm  Wednesday. Helping overcome diminished sales at AOL were Time Warner's film and cable groups, which have seen an increase in customers and several major movie successes. Overall earnings met analysts expectations of 29 cents per share, up from 23 cents one year ago, when certain company investments writedowns and gains on asset sales are excluded, and revenue was also the same as industry projections. "Costs will continue to be reduced and advertising should continue to grow," said John Martin, Time Warner's chief financial officer, commenting on predicted second quarter growth. AOL too should continue being profitable according to Martin. "The results of all this is that we continue to expect AOL to maintain its overall profitability on a considerable scale," Martin said. The job cuts are expected to get rid of 100 corporate level positions in a measure Time Warner says will save $50 million annually. Film Studio and Other Plans Bewkes said he plans to reduce expenses at the firm's New Line Cinema unit and will look into selling two of its film studios. His plan calls for an initial 15 percent reduction in corporate spending. Time Warner Cable president and chief executive Glenn Britt said Wednesday the outlook is good for the firm. "We close the books on 2007 having met or exceeded all of the elements of our full-year business outlook and are eager to build on that success in the coming year," Britt said. "To achieve our ambitious goals, we're ready to fight for every single customer by delivering the innovative products and services that they want -- today. We're very well prepared to compete, and we are focused on improving our position every day. Beyond competing for customers in our existing businesses, we're expanding into commercial services that we believe can substantially boost our results over time. We remain confident that, by maintaining our strict capital spending discipline, we can generate robust free cash flow growth for the foreseeable future," added Britt. Time Warner To Split AOL Splitting AOL will take "several more months," according to Martin, due to the process being "fairly complicated," he said. AOL is not waiting to boost its Internet advertising business, as witnessed by its Tuesday purchase of online affiliate network Buy.at, its fifth purchase in 12 months. Financial terms of the acquisition have not been disclosed. Since the giant $112 billion merger of Time Warner and AOL in 2001, the firms strength has largest rested on the shoulders of only two groups, cable television and AOL. Time Warner's Cable is the industry's second biggest cable service, behind only Comcast. Related Links:
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11:21 pm on Feb. 6, 2008 (utc 0)