Time Warner Cable Inc has agreed to completely sever ties with its parent company Time Warner Inc, which will receive a tasty payout from the spin-off.
A one-time dividend, payable immediately prior to the separation, will be paid to Time Warner Cable stockholders of $10.27 a share for a total of about $10.9bn. Time Warner will reap a $9.25bn of this because it owns 84 per cent of the cable company.
“This is the right step for Time Warner and Time Warner Cable stockholders," said newly-installed CEO Jeffrey Bewkes in a statement. “We're bullish on Time Warner Cable's prospects, but its strategic goals and capital needs are increasingly different from those of our other businesses."
Time Warner’s amputation of its US cable arm follows intense pressure on Bewkes from investors to rejig Time Warner’s strategy.
Investors had pushed for the bloated company to focus its efforts on Time Warner’s entertainment businesses, as well as turning around AOL.
Just last month AOL saw its earnings slide 74 per cent on revenues that were down by nearly a quarter.
Terms of the Time Warner Cable spin-off, which is expected to complete in the fourth quarter, were cleared at a meeting of the firm’s board of directors yesterday.
Time Warner's press release is here (pdf). ®