Bewkes Keeps It Close to the Vest

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While analysts have been speculating about the massive change that could be in store for Time Warner Inc., once current chief operating officer Jeff Bewkes becomes CEO next year, the long-time company executive wasn’t taking the bait Wednesday.

Bewkes is slated to take over as CEO from Richard Parsons on Jan. 1. But he remained vague when asked about his plans for the company on a conference call with analysts to discuss the media giant’s third quarter results.

On the conference call Bewkes was peppered with questions regarding the potential to alter Time Warner’s structure – mainly reducing its 84% stake in Time Warner Cable – the possibility of spinning off its AOL online unit and even about the differences in management style between himself and Parsons. On each question, Bewkes kept his cards close to the vest.

Bewkes’ main thrust appeared to be that Time Warner’s operating divisions are performing well and that there are no immediate plans for radical change.

“We’ve got pretty strong momentum in our divisions right now and going into 2008,” Bewkes said when asked what he saw were future growth drivers and what he would change in Time Warner’s corporate structure. “Generally what we do and will do is we’re going to grow our businesses in each one of the main industries where we’re competing. But we really are going to keep focusing on increasing our strategic advantage, through whatever operating decisions we make or whatever we do structurally.”

Asked whether he viewed a Time Warner Cable spin differently than Parsons, who has said in the past that TWC could be used as a currency to make deals – Bewkes again deflected the question.

“It’s not appropriate for us to describe our view now,” Bewkes said. “As you read all the commentary, you can get advice in almost every direction. Obviously we are aware of it all. We will consider it and make decisions in due course.”

Bewkes also managed to tweak the nose a bit of the poser of that question, Pali Research media analyst Richard Greenfield. Greenfield has been a vocal critic of Time Warner Inc. and has called for a break up of the company for months. “First of all I’d like to thank you for all the suggestions you’ve been offering over the past month,” Bewkes said to Greenfield after the latter posed his question.

Whatever Bewkes has in store for Time Warner in the future, the present doesn’t look that bad. Revenue at the media giant was up 9% to $11.7 billion in the third quarter and adjusted operating income before depreciation and amortization (AOIBDA, a measure of cash flow) rose a healthy 15% to $3.2 billion in the period.

Driving that growth were gains at its cable operations – revenue rose 7.4% and OIBDA increased 12% at TWC – and its cable networks. Cable network revenue increased 6% to $2.6 billion and AOIBDA was up 6% to $830 million, fueled by gains at Turner Network Television and Turner Broadcasting System.

At AOL, revenue declined 38% primarily because of a 56% decline in subscription revenue as it continues to move towards an advertising-centric model.

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