Time Warner announced they will structurally separate Time Warner Cable (TWC) from the parent company. Investors have been pressuring Time Warner execs to do just that, thinking that a separate TWC will add more value to Time Warner shares. From an investor point of view, the cable business can be a real drag. It’s CAPEX intensive, especially in these competitive times, and some investors think TWC drags down Time Warner’s content assets.
Being separated from Time Warner may allow TWC to become more aggressive with competitors and do things that the current parent company does not have the stomach for. Cox took things a step further over a year ago, by going totally private. The whims of Wall Street and the quarterly earnings grind don’t mesh well with a company that needs to spend significant amounts of CAPEX and sales and marketing budgets to meet their competitors head on. TWC hasn’t gone that far yet, but by separating from their parent company, they may raise their competitive visibility in the marketplace. Their most recent results weren’t bad by any stretch. They grew in just about every category, including reaching triple play penetration of 18%, or 2.6 million households. Look for them to get even more aggressive when they are a stand alone cable MSO.