Bewkes: No Need to Split


Time Warner Inc.’s newly minted president and chief operating officer, Jeff Bewkes, tweaked corporate raider Carl Icahn at an investor conference last week, telling the audience of analysts and investors that splitting up the media giant would not increase value.

Time Warner has been under siege from Icahn since August, when he announced he had accumulated a 3% stake in the media giant and would nominate a new slate of directors at its next annual shareholders meeting. Icahn has also called for Time Warner to spin off its America Online and Time Warner Cable assets into separate publicly traded companies.

Bewkes, who was promoted to president and chief operating officer on Dec. 21, said there are two reasons to separate — either to optimize the capital structure to boost returns or to get investor pools that are in different risk profiles matched up to different businesses.


He added that as Time Warner looks at its various business units, they are outperforming their competitors in every sector.

“If we separated a piece, would it help or hurt that performance?” Bewkes said. “We haven’t seen any material gain we could give you by doing that. As soon as we see that there is one, we would then do that. We would do whatever is best for returns.”

Bewkes also added some more insight to another deal that Icahn has criticized, its December agreement to sell a 5% stake in AOL to Internet search giant Google Inc. Bewkes told conference attendees Time Warner will receive about $300 million in promotions from Google as part of that deal.

In addition to the equity stake, the agreement calls for Google to continue to provide search technology to AOL properties, expand display advertising and collaborate with AOL on video search and to showcase AOL’s premium video service within Google Video.

“What’s new is that AOL can now sell directly with its advertising partners paid search that Google provides,” Bewkes said at the Citigroup Entertainment, Media & Telecommunications conference in Phoenix last Tuesday.

“Second, is that Google has agreed to give us promotional dollars to drive traffic [to Web site], to the tune of $300 million.”


Earlier, Comcast Corp. chairman and CEO Brian Roberts, said Comcast signed on 202,000 voice over Internet protocol telephone customers in 2005, and should add another 1 million by the end of 2006.

That number is at the low end of Comcast’s previous guidance of between 200,000 and 250,000 VoIP customers by year-end.

Roberts, speaking last Monday, said that Comcast has exceeded its guidance for marketable homes for voice — 16 million versus guidance of about 15 million — and the service is available to 20 million homes currently, although it does not market to all of those homes.

But acceptance is picking up: Comcast added 15,000 to 20,000 voice customer a week in the last few weeks of December, which demonstrates strong demand, the CEO said. At that pace, Comcast would add more than 1 million customers in 2006.

“This industry is quite real,” Roberts said.