Media conglomerate Time Warner Inc. and its cable television arm Time Warner Cable Inc. said Wednesday their boards have approved the companies' legal separation, with Time Warner Cable expected to pay a hefty $10.9 billion one-time dividend. As parent of the nation's second-largest cable TV operator, Time Warner will receive $9.25 billion of the payout, or $10.27 per share of Time Warner Cable common stock. The dividend will be distributed just prior to the deal's completion. The move was widely anticipated. In April, Time Warner said it would spin off the rest of its cable TV business, answering investor pleas to further simplify its sprawling operations. Time Warner Cable became a separately traded public company a little more than a year ago, but was still majority owned by Time Warner, which also operates Warner Bros., CNN, AOL and Time magazine. “After the transaction, each company will have greater strategic, financial and operational flexibility and will be better positioned to compete,” said Time Warner President and Chief Executive Jeff Bewkes in a statement. “Separating the two companies will help their management teams focus on realizing the full potential of the respective businesses and will provide investors with greater choice in how they own this portfolio of assets.” Time Warner shares rose 23 cents to $16.38 in morning trading, while Time Warner Cable shares rose 31 cents to $30.53. Time Warner said it will swap its 12.4 percent stake in TW NY Cable Holding Inc., a unit of Time Warner Cable, for 80 million new Time Warner Cable Class A common shares - boosting its ownership in the cable and high-speed data and voice services provider to 85.2 percent from 84 percent. Time Warner also will convert its Time Warner Cable Class B common shares, each of which has the voting power of 10 Class A common shares, into Time Warner Cable common stock on a 1-for-1 basis - creating just one stock class.
