Business torrents

NEW YORK–Media conglomerate Time Warner Inc. and its cable television arm Time Warner Cable Inc. said yesterday their boards have approved the companies’ legal separation, with Time Warner Cable expected to pay a hefty $10.9 billion (U.S.) one-time dividend.

As parent of America’s second-largest cable TV operator, Time Warner will receive $9.25 billion of the payout, or $10.27 per share of Time Warner Cable common stock. The dividend will be distributed just prior to the deal’s completion.

The move was widely anticipated. In April, Time Warner said it would spin off the rest of its cable TV business, answering investor pleas to further simplify its sprawling operations. Time Warner Cable became a separately traded public company just over a year ago, but was still majority owned by Time Warner, which also operates Warner Bros., CNN, AOL and Time magazine.

"After the transaction, each company will have greater strategic, financial and operational flexibility and will be better positioned to compete," said Time Warner president and chief executive Jeff Bewkes in a statement.

Separating the companies will help management teams focus on realizing the unit’s full potential "and will provide investors with greater choice in how they own this portfolio of assets," he said.

Time Warner shares rose nine cents to $16.24 on the New York Stock Exchange yesterday, while Time Warner Cable gained $1.05, or 3.47 per cent, to $31.27.

Time Warner will swap its 12.4 per cent stake in TW NY Cable Holding Inc., a Time Warner Cable unit, for 80 million new Time Warner Cable class A common shares – boosting its ownership to 85.2 per cent from 84 per cent free credit report.com. It will convert its Time Warner Cable class B common shares into Time Warner Cable common stock on a one-for-one basis – creating just one stock class.

Associated Press

Source