Bewkes: TWC Split On Track For Early 2009
Says Company Won't Use Dividend For Acquisitions
By Mike Farrell -- Multichannel News, 12/10/2008 7:20:00 AM
New York—Time Warner Inc. CEO Jeff Bewkes said at an industry conference here Wednesday that the long-awaited split with Time Warner Cable should occur early next year, adding that regulatory approval of the breakup should come shortly.
At the UBS Media and Communications conference, Bewkes said that regulatory approval should come in the “next month or so,” with execution of the deal in early 2009.
The split will transform Time Warner into a pure-play content provider, with its Warner Bros. movie studios, cable networks and publishing division. As a result of the split, Time Warner Inc will receive a $9.2 billion cash dividend from Time Warner Cable, an asset that Bewkes said would be managed carefully.
Bewkes said that what Time Warner does with the dividend will be determined by what method it believes will return the most value to shareholders. While that could take many forms—a cash dividend or additional share buybacks—Bewkes said it won’t likely be used for acquisitions.
Bewkes said one of the main causes of value destruction in the media industry, Time Warner included, has been poor acquisitions.
“I don’t want to rule out sensible acquisitions, but the history of our company would make you concerned about the dangers of acquisitions if they are not done carefully,” Bewkes said.
Bewkes also said that Time Warner Inc. will provide further information concerning its leverage targets after the split. Currently, the company said it would like to be leveraged about 1.5 times forward looking cash flow, and in the past has said it could take that ratio up as high as three times.
“We will be in the first months of the year making a more clear public confirmation of what the [debt] level will be,” Bewkes said, adding that it will likely be less than three times.
He stressed that if Time Warner does decide to tick up leverage, it will be over a period of years.
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