It's amazing how corporate strategy has changed over the years at Time Warner Inc. [TWX]. The once-biggest global media company will be showing off a Jenny Craig version of itself soon with Wednesday's announcement it will separate its cable division. Investors seemed indifferent to the proposed deal as the stock showed no movement, but overall markets were advancing as they anticipate another Fed rate cut. The Dow was trading up 99.49, or 0.76%, to 12,930.05, while the Nasdaq advanced 12.95, or .55%, to 2,439.08.
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Time Warner wants to spin off its cable operations, which is the second-largest in the U.S. and a big earnings generator for the company. The cable unit reported a higher-than-expected profit for the first quarter, as it added 55,000 basic video subscribers in the quarter, to $242 million.
The move is an about-face from the beginning of the decade when the company was betting its future on the merger with America Online. The deal turned out to be one of the worst M&A deals ever. Today, AOL is a unit of the New York-based media company and has become a thorn in the side of Time Warner, with subscribers fleeing the Internet service for cheaper, faster alternatives. Time Warner is trading down 6 cents, 0.59%, to $15.71 Wednesday.
One of AOL's competitors, United Online Inc. [UNTD], is down 57 cents, or 5.26%, to $10.28 on the announcement that it will now be in the flower business with its $800 million stock-and-cash purchase of FTD Group Inc. FTD stockholders will end up with 15% of United Online after the deal is completed.
Lastly, telecommunication infrastructure provider CommScope Inc. [CTV] jumped $5.39, or 12.95%, to $47.00 as it completed the divestiture of its minority interest in Andes Industries Inc. Andes will pay up to $16 million for CommScope's stake, but only if it's acquired by a third party or some other extraordinary event occurs. The divestiture is part of CommScope's compliance with terms of a settlement agreement with the Department of Justice that allowed it to complete its acquisition of Andrew Corp. for $2.7 billion in December 2007. - Gerald Magpily
