The Newhouse brothers -- who own privately held publishing giant Advance
Publications -- are unhappy with AOL Time Warner Inc.'s management of their joint
cable-operating venture and want out.
Investors had feared that AOL Time Warner would buy out Advance's interest for $8 billion or
so in some combination of cash, stock and assumed debt, so this deal is a bit of
At the same time, it will shrink Time Warner Cable's portfolio by 16 percent and
drain off about $1.3 billion in annual revenue and $570 million in annual cash
AOL Time Warner does, however, get to unload about $800 million in debt.
The breakup won't be a total split, essentially leaving the properties in a
partnership but giving Advance management control and tying its economic
interests solely to the systems it controls.
Newhouse will get properties serving approximately 2.1 million cable
customers in central Florida; Tampa Bay, Fla.; Birmingham, Ala.; Indianapolis; Bakersfield, Calif.; and Detroit, as well as several smaller systems in
Alabama and northern Florida.
Robert Miron, CEO of Advance/Newhouse, said he will have to re-create a layer
of corporate management for the systems.
"We will build a small organization," Miron said, but he emphasized that he
will depend primarily on existing field management.