Bewkes: TWC move coming

Exec says Microsoft-Yahoo deal would benefit AOL

Time Warner CEO Jeffrey Bewkes signaled Tuesday that Time Warner Cable likely is to become a separate entity and said that a Microsoft acquisition of Yahoo would underline the value of TW's AOL unit.

Speaking at the Bear Stearns Media Conference in Palm Beach, Fla., Bewkes also shrugged off suggestions that TW's core content businesses were mature, saying international expansion and digital growth would provide significant upside. As an example, he pointed out that CNN's earnings have doubled during the past four years thanks to international and digital initiatives, as well as cost reductions.

Bewkes on Tuesday wouldn't rule out a deal for AOL. "It's our obligation to get AOL into the strongest combination and fit," he said. He didn't say whether AOL is talking with Yahoo about a merger. Last week, reports said there have been such talks.

Asked how a combined Microsoft-Yahoo would affect AOL, Bewkes said as a positive, that it would "verify the value" of AOL's advertising platform. On the downside, AOL would face a bigger competitor.

In regards to AOL's sluggish advertising trends in recent quarters, Bewkes said the unit likely will see "one more quarter" of sluggish or no growth because of users who migrated to the free AOL service. But beyond that, momentum should accelerate again, he said.

In terms of TWC, in which TW holds an 84% stake, Bewkes said TWC's public shares are "not enough," making it better off as a stand-alone entity with a separate balance sheet. TW has said it likely will make a decision on TWC by late April, and Bewkes said Tuesday that his team is checking if the cost of a separation is indeed worth it.

When an investor suggested that TW's financials would be reduced significantly if TWC is spun off given the unit's big operating cash flow contribution, the CEO reiterated that he isn't looking to make TW the biggest media conglomerate -- only the most profitable and valuable.

"It doesn't matter whether Time Warner as a conglomerate is larger or smaller," he said. "We want it to (have) the highest return."

Also at the conference, Vivendi chairman and CEO Jean-Bernard Levy said his company will sell its 20% stake in NBC Universal "at the right time" without providing specifics. However, he lauded NBC Uni for gaining profit momentum in recent quarters.

He also told investors he expects a merger of Vivendi's video game unit with Activision to close by the end of the second quarter once the parties get approval from European regulators. He forecast the combined company would bring in at least 14% profit growth a year.
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