Time Warner takes steps to restructure as shares rise

By Kenneth Li

These moves involve cost cuts across the company, starting with eliminating 100 jobs from its corporate offices to save about $50 million a year.

Time Warner will begin discussions to possibly spin off its 84 percent stake in Time Warner Cable .

Time Warner shares rose as much as 5 percent on Wednesday. They had lost as much as 36 percent since their most recent 52-week high in June 2007.

"We'll make sure that Time Warner has the right businesses in the right structure," newly appointed Chief Executive Jeffrey Bewkes said. "In change lies opportunity."

Excluding special items, earnings were 29 cents a share, matching the analysts' average forecast, according to Reuters Estimates. Year-earlier profit, excluding the gain, was 22 cents a share.

"The numbers were slightly above our expectations across the board, led by cable," said analyst Christopher Marangi of Gabelli & Co, which owns shares of Time Warner.

While its 2008 profit growth is sharply lower than 2007's 17 percent rise, that is largely due to Time Warner Cable's purchase of Adelphia cable systems, which closed in mid-2006. Excluding gains from that deal, 2007 growth would have been 8 percent.

RESTRUCTURING BEGINS

Bewkes told analysts on a conference call that Time Warner's move to separate AOL's operations "should significantly increase AOL's strategic options."

Bewkes also said the company is starting negotiations with Time Warner Cable over a possible spin-off of its 84 percent stake. Talks will likely conclude by the time it reports first-quarter earnings, executives said.

In response to a question, Bewkes did not rule out the possibility of buying back Time Warner Cable, which has lost nearly half of its market value on threats of more competition from telephone companies and a possible U.S. recession.

Once the world's largest media company by market capitalization, Time Warner has lost that title to News Corp as its shares fell over the past year on concerns about AOL and the weakening U.S. economy's impact on cable.

Time Warner has not given up on AOL yet. On Tuesday, it purchased buy.at -- its fifth online advertising-related acquisition in 12 months.

Movie studio revenue rose 13 percent, while operating profit before items increased 46 percent, boosted in part by the box office sales of the film "I Am Legend."

AOL's adjusted operating profit could reach 2007 levels, but could also be down slightly.

Time Warner Cable's shares were down 2.8 percent, or 67 cents, at $23.73 after it gave a weaker 2008 outlook.

(Editing by Lisa Von Ahn, Maureen Bavdek, Gary Hill)