TW shareholders OK reverse stock split

Potential future move to come after cable separation

NEW YORK -- Time Warner shareholders on Friday authorized a potential future reverse stock split as chairman and CEO Jeffrey Bewkes once again touted the conglomerate's more limited exposure to the hurting advertising market.

In a special meeting, shareholders controlling about 84% of the company's common stock gave the TW board authorization to effect either a 1-for-2 or a 1-for-3 reverse stock split once a planned separation of Time Warner Cable is completed.

Asked why the move makes sense, Bewkes said that by excluding TWC's value from TW's stock, the conglomerate's shares will likely be firmly put into the single-digit price range. With fewer shares on the market, the stock could advance, and with a higher stock price, certain funds that only buy stocks above certain price levels wouldn't be lost as investors, he added.

"There is currently about $2.28 of TW Cable value per TW share; in turn, we believe the TW stub current share price is approximately $7.15," Pali Research analyst Richard Greenfield estimated in a research report Friday.

The separation of TW Cable is expected to be completed during the first quarter after a vote by the FCC.

Bewkes also once again argued that despite a full-year 2008 earnings warning by TW, his firm isn't exposed to TV and other ad businesses as strongly as many peers. TW's business mix should ensure a certain "resilience" amid the recession, he said.

Asked about possible unit sales, Bewkes said he would be looking at a sale of the Time Inc. publishing arm if it doesn't grow earnings. "So we need the publishing business to be growing earnings at a clip that can satisfy shareholders, or it has to be monetized in another way," he said. However, he added that the recession is likely the wrong time for any such decision.

TW also is still mulling the future of its AOL unit, Bewkes said. Analysts have increasingly suggested a sale or other deal is unlikely in the current downturn.

TW shares closed up 1.9% at $9.61.
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