Time Warner to Spin Off Cable Unit; 1Q Profit Declines

The announcement was made as Time Warner reported first-quarter net income fell 36 percent to $771 million, or 21 cents a share, from $1.2 billion, or 31 cents, a year earlier. Sales rose 2.1 percent to $11.4 billion.

Revenue grew 2 percent to $11.4 billion. According to Thomson Financial, analysts expected the company to earn 23 cents a share on $11.4 billion in revenue.

"We've decided that a complete structural separation of Time Warner Cable, under the right circumstances, is in the best interests of both companies' shareholders," Bewkes said in a statement.

"We're working hard on an agreement with Time Warner Cable, which we expect to finalize soon."

The company's shares was down 18 cents or 1.18 percent to $15.09 in morning trading on the

New York Stock Exchange.

AOL

AOL lost 647,000 Internet-access subscribers during the quarter, making the total user base 8.7 million at the end of March to. The business has lost more than half of its customers in the past two years.

Revenue at the unit declined 23 percent to $1.1 billion, and operating profit totaled $284 million. AOL relocated to New York this month in a bid to attract more Madison Avenue advertisers and is integrating purchases of online ad companies.

AOL's sales of display ads fell 18 percent in the first quarter from a year ago, and are again expected to decline in the current quarter.