Updated: The Jeff Bewkes era at Time Warner (NYSE: TWX) goes public with his first earnings call — outlining his three-way approach to increasing the company’s value and stock price, backing in to the news: AOL will split in two — setting up separate access and audience business (which means it won’t be sold or spun off as is) and the decision about Time Warner Cable (NYSE: TWC) has yet to be made.
— the cost-cutting will start at home with 15 percent at corporate, reducing costs by about $50 million a year. (That includes 100 layoffs, none very senior, according to the company.) Also under review, New Line Cinemas and whether it makes sense to have two full studios; action is expected “fairly soon.” (Possible translation: Hey, Terry, make us a good offer.)
— Bewkes says TW had early successes with digital but needs to be “a bit more” revolutionary, not evolutionary. He thinks all linear ad-supported networks should make programming available on demand — on TV sets, not just broadband. Time Warner will be “aggressive” doing that with its networks “so we can show the industry the benefits of this model.”
AOL: Bewkes set the stage by talking about the accelerated change from subscription-based to ad-supported — which he championed and oversaw. The vast majority of subs who switched to free stuck around, page views are stabilized and AOL still has maintained a base of profits and grown its earnings. It’s also reduced costs by more than $1 billion in the past 12 months. At the same time, the company has invested in assembling Platform A. Then, he almost casually dropped in the newest solution to AOL’s woes: “At the same time, we need to complete AOL’s business model transition, so we are working on separating AOL’s access and audience businesses so we can run them independently.” What he didn’t say: We’re working to separate AOL access from the growth-potential businesses, possibly setting stage for the sale of one, the other or both. No specifics on how this would be accomplished but would think an ISP sale a la UK and Europe could be possible or even some kind of merger of that business with another ISP. That would leave the advertising/audience business, which should be easier to package without the business that gave AOL its start and its power for so long. More after the jump…
— During the Q&A, Bewkes said the plans to separate AOL audience and access are underway but “we think it will take several more months because it’s fairly complicated. … It’s one of our top priorities.) The company is open to strategic alternatives but Bewkes isn’t going for the drama today as some had hoped. Instead, the emphasis is on what AOL has accomplished so far and growth to come. He also said he didn’t see a change of strategy with the audience business: “we
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