Changes planned for Time Warner

Time Warner’s stock has fallen 29 percent in the past 12 months.

NEW YORK (AP) — Time Warner Inc.’s new CEO Jeff Bewkes laid out his vision for changes at the media conglomerate Wednesday, including dividing AOL’s online access and advertising businesses and possibly spinning off the rest of the company’s cable division.

Investors have looked to Bewkes, who took over in January, to dramatically restructure the company in hopes of reviving shares that have slumped 29 percent over the past 12 months.

Investors liked what they heard. Shares rose 66 cents, or 4.3 percent, to $16.03 in midday trading.

Bewkes was speaking with analysts about the company’s fourth-quarter earnings, which fell 41 percent following a big gain last year from the sale of AOL’s European online access business.

Without the year-ago gains and other one-time effects, adjusted profits rose 17 percent on stronger results for cable TV and movies. Time Warner said it expected that growth to slow this year to a range of 7 percent to 9 percent.

Time Warner owns 84 percent of Time Warner Cable and may now have more options for spinning off the division tax free. However it’s not clear that a complete spinoff will happen, particularly given a recent sell-off that has hurt the value of all cable stocks.

Bewkes said the company was working to separate AOL’s growing online advertising-based business from the dial-up access business, which is in rapid decline as people shift to high-speed Internet service from cable TV and phone companies.

That could make AOL more attractive to potential bidders. However, those prospects became murkier last week when Microsoft Corp. made an unsolicited bid for Yahoo Inc. That would not only eliminate two likely bidders for AOL, but create a major online advertising power.

Google Inc. owns 5 percent of AOL and has a right to trigger an IPO of its stake in July. Google paid $1 billion in late 2005, valuing all of AOL at $20 billion. AOL’s value today is far less certain.

A spinoff or sale of AOL, should it occur, would mark a sea change from 2000, when Time Warner agreed to be purchased by the Internet company then known as America Online at the top of the dot-com bubble. The deal turned out to be disastrous, leading to massive write-downs and settlements with shareholders and regulators over accounting improprieties.

Time Warner’s cable division is the largest part of Time Warner, where many of the other assets are focused on video entertainment, including Warner Bros., New Line Cinema and a group of cable networks including HBO, CNN and TBS. Time Warner also owns Time Inc.