Time Warner to Divide AOL in Two

Time-Warner (TWX) CEO Jeff Bewkes said on the company’s post-earnings conference call with analysts Wednesday that the company plans to divide AOL into two parts, splitting off the rapidly shrinking access business from its content and advertising segments. That should make it easier to sell off one or both of them.

Bewkes also said on the call that the current structure of its relationship with Time Warner Cable (TWC) - the parent owns an 84% stake with just 16% in public hands - was “less than optimal for both companies." (Presumably they are thinking about how to get more shares into the float.)

Not least, Bewkes says the company plans to cut corporate costs by over 15%, a reduction of more than $50 million a year. He also said the company expects to make near-term cost cuts at its New Line Cinema unit.

Time-Warner earlier Wednesday reported fourth quarter revenue of $12.6 billion and EPS of 28 cents, about in line with the Street at $12.65 billion and 29 cents.

The company said it expects 2008 EPS of $1.07 to $1.11 a share, with OIBDA growth of 7%-9%; and free cash flow at or above $3.6 billion. The Street had been looking for $1.11 a share.

Time Warner Wednesday morning is up 70 cents, or 4.6%, at $16.10.