AT&T, Comcast and AOL Time Warner are reportedly close to a deal to unravel the Time Warner Entertainment cable and content partnership and launch a multi-billion-dollar IPO.

TWE houses most of AOL TW’s cable systems plus the Warner Bros movie studio and Home Box Office cable network. It is owned by AOL TW (74.5%) and AT&T (25.5%), but the latter stake will transfer to Comcast when its purchase of AT&T’s cable television interests is completed later this year.

The deal under discussion is complex. Warner Bros and HBO would be shifted back to AOL TW, which would transfer into TWE those of its cable systems not already in the partnership.

The merged AT&T and Comcast would take a holding of about 35% in the new-look TWE, and would put this stake up for public sale. The resulting IPO could generate several billion dollars, making it one of the largest ever in US corporate history.

With a stake of around 65%, AOL TW would retain control of TWE, which would be little more than Time Warner Cable, America’s second largest operator behind AT&T/Comcast.

An agreement is said to be only a few weeks away, but stumbling blocks remain. The timing of the IPO is a thorny issue, given the current depressed state of cable shares, and it is feared regulators will object if Comcast retains its stake until markets improve.

All sides are now awaiting a valuation of TWE from Bank of America before talks progress.

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