Time Warner Splits From Time Warner Cable

New York, NY (AHN) - Time Warner, the world's largest media company, announced Wednesday its separation from Time Warner Cable business, a move that will net shareholders a $9.25 billion one-time cash dividend.

"We're bullish on Time Warner Cable's prospects, but its strategic goals and capital needs are increasingly different from those of our other businesses," Time Warner Inc. CEO Jeff Bewkes said.

The spin-off will cost Time Warner Cable,the No. 2 U.S. cable-TV-service provider, $10.9 billion, which translates to a $10.27 per share dividend to shareholders.

Bewkes noted that this is the right step for both companies, adding that after the transaction, "each company will have greater strategic, financial and operational flexibility and will be better positioned to compete."

Time Warner Cable CEO Glenn Britt told Marketwatch that the deal is favorable for the cable company as it increases its "ability to compete aggressively" in the industry.

Time Warner gained $0.19 cents, or 1.2%, to $16.34 in New York Stock Exchange composite trading while Time Warner Cable rose $0.57 cents to $30.79.