Time Warner Plans Hit By Comcast Cable Stock Sale

06 January 2004

US media giant Time Warner may have to use some of the cash earmarked for acquisitions to buy shares in its own cable unit.

In a surprise move, America's leading cable operator Comcast last week asked that its 17.9% stake in Time Warner Cable be registered for public sale.

Time Warner must now undertake "commercially reasonable efforts" to gain a green light for the sale from the Securities and Exchange Commission within 120 days. The SEC, however, is currently investigating the firm's accounts, meaning approval for a stock registration is unlikely. That means Time Warner may have to purchase some or all of the shares to settle the matter.

The news is a blow to the media mammoth's acquisition plans. Time Warner had been expected to increase its cable-TV portfolio after an asset sell-off allowed it to meet debt reduction targets a year early.

Comcast acquired the stake after it purchased AT&T's cable unit in 2002. It took over the latter's interest in the Time Warner Entertainment partnership and received the TWC holding when this alliance was unravelled last year [WAMN: 02-Apr-03].

Time Warner initially planned to pay off Comcast by floating up to 20% of TWC -- America's number two cable operator -- in the first half of 2003. However, the accounts probe has delayed this offering.

Some regard Comcast's surprise request as a negotiating tactic in its bid to cash in its stake.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff