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Time Warner Inc. announced Wednesday it will spin off its Time Warner Cable Inc. division in a $9.25 billion deal.

New York-based Time Warner Cable (NYSE: TWC) is the only cable operator in Hawaii with about 400,000 subscribers statewide. It operates under the Oceanic Time Warner Cable name.

The companies' boards have approved the spin off. Time Warner will exchange its 12.4 percent interest in TW NY Cable Holding Inc., a subsidiary of Time Warner Cable, for 80 million newly issued shares of Time Warner Cable's Class A common stock. That will increase Time Warner's ownership stake in Time Warner Cable's common stock to 85.2 percent from 84 percent.

Time Warner Cable will then issue a $10.9 billion dividend to shareholders. Parent company Time Warner will receive $9.25 billion of that.

"After the transaction, each company will have greater strategic, financial and operational flexibility and will be better positioned to compete," Jeff Bewkes, chief executive of Time Warner, said in a statement. "Separating the two companies will help their management teams focus on realizing the full potential of the respective businesses and will provide investors with greater choice in how they own this portfolio of assets."

The transaction is slated to close in the fourth quarter.

In April, Time Warner Cable reported a 12.3 percent drop in first-quarter profits. Net income was $242 million, or 25 cents per share, down from $276 million, or 28 cents per share, in the first quarter of last year.

Revenue increased 8 percent to $4.16 billion from $3.85 billion a year ago.

Analysts polled by Thomson Financial had projected earnings of 22 cents per share in the latest quarter.

Business First (Buffalo)

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