News

2H for Time Warner Cable IPO

4/23/2003 7:06 AM Eastern

AOL Time Warner Inc. told analysts Wednesday that it was exploring the sale
of its Warner Music Group's manufacturing arm and that a planned initial pubic
offering of its Time Warner Cable division would be delayed until the second
half of the year.

In a conference call with analysts, entertainment and networks group chairman
Jeff Bewkes said the sale of the music-manufacturing unit was being
considered.

"This is a business we would clearly consider exiting at the right price,"
Bewkes said.

Analysts have estimated that the sale of the manufacturing arm could bring as
much as $1 billion.

AOL Time Warner has pledged to reduce debt from $26 billion to $20 billion by
the end of 2004. This year, it raised about $2 billion through asset sales --
$800 million by selling its 8.4 percent stake in Hughes Electronics Corp. and
$1.23 billion through the sale of its 50 percent interest in Comedy Central --
that will help to pay down debt.

The company was also counting on the Time Warner Cable IPO -- which could
raise at least $2 billion for the parent company -- to reduce that debt even
further. First slated for a second-quarter launch and later pushed back to the
summer, AOL Time Warner CEO Richard Parsons said the IPO will likely occur in
the second half of the year.

"All of the necessary internal processes continue to move forward, but we
probably will be looking to that in the second half of the year now, instead of
by June," Parsons said on the conference call.

Sources familiar with the situation have said in the past that the IPO would
be delayed until the fall.

AOL Time Warner reported a surprisingly strong first quarter -- revenue was
up 6 percent to $10 billion and cash flow was up 14 percent to $2 billion, led
by its filmed-entertainment, networks and cable divisions.

At Time Warner Cable, revenue climbed 9 percent to $1.8 billion and cash flow
rose 6 percent to $691 million. The cable unit added 23,000 basic subscribers in
the period, finishing the quarter with 10.8 million customers.

Time Warner Cable also reported strong growth in digital subscribers, adding
199,000 new digital customers to finish with 3.9 million in the quarter.
High-speed-data customers increased by 260,000 to 2.7 million.

AOL Time Warner also reiterated its full-year-2003 guidance, stating that
revenue is expected to grow in the mid-single-digits and cash flow should rise
in the low- to mid-single-digits.

The America Online Inc. unit continued to struggle -- subscribers were down
by 290,000 in the quarter and ad revenue dipped 4.1 percent. But cash flow rose
18 percent, mainly due to declining costs.

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