Time Warner sees possible separation of cable

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NEW YORK, June 7 (Reuters) Time Warner Inc. said on Thursday it could see a complete separation of its majority-owned cable services company in five years, but it had not made a decision yet.

The world's largest media company's stake in Time Warner Cable could diminish over time as the cable division begins buying other cable properties, Time Warner Chief Executive Richard Parsons said at the Merrill Lynch U.S. media conference held in London.

''Eventually, five years down the road, it's conceivable to me that because of the way that business grows ... There could come a point in time when there's two separate stand-alone companies,'' Parsons said. ''I'm not prepared to make that call yet.'' On AOL, one of the most closely tracked division of Time Warner, Parsons said he was encouraged by its progress in transforming it into an online advertising sales ''machine'' from its prior business in selling Internet access.

He said the company would consider AOL's options at the end of the year. Some Wall Street analyst have speculated the company would consider spinning off or merging AOL with another company.

''By end of this year, we can make the call on AOL (on whether) we have we found a business model or approach that can result in sustainable growth over time,'' Parsons said. ''We're in the right area.'' Time Warner spun off a 16 percent of its cable services division this year as part of a plan to create publicly traded equity that could be used to finance purchases.

''That space is going to consolidate and we want to participate in that consolidation,'' Parsons said.

As Time Warner Cable begins to buy up other systems, Time Warner's ownership would likely diminish over time, he said.

Parsons spoke broadly on other topics including its view of the publishing industry, and dismissed speculation it was considering the split off or sale of slow-growing Time Inc., its publishing division.

''We're not looking to move our publishing company out,'' he told Merrill Lynch analyst Jessica Reif Cohen during a question and answer session. He added that Time Warner would continue to shut down unprofitable titles and sell off others.

''Magazines will be around for a long time,'' he said. ''It can be in the 8, 9, 10 percent growth business for a long time, if we successfully make this transition to digital.'' REUTERS PV HT1930

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