AT&T, the US telecoms company, has completed the sale of its 27.6% stake in Time Warner Entertainment.
AOL Time Warner has paid $9 million for full control of TWE and will now take sole charge of the Warner Brothers film studios plus a number of cable channels including HBO amd Comedy Central. The payment will be made up of $2.1 billion in cash, $1.5 billion in shares and a 21% stake in Time Warner Cable which is to be spun off from the parent company and floated.
“This restructuring of TWE is the best possible outcome for our investors and marks another important step in achieving our company’s near-term priorities,” said AOL chief executive, Richard Parsons. “Through this restructuring, we will simplify our overall structure, while maintaining the integrity of our balance sheet.”
Despite this upbeat prognosis, analysts continue to express concern at AOL’s debts which are now approaching $30 billion. In addition, the company remains under investigation by the Securities and Exchange Commission.
According to today’s Financial Times, fifteen senior executives are to be questioned over ambitious earnings forecasts made almost two years ago. It is alleged that they made profits of almost $500 million by selling shares in the first half of 2001, while the company insisted that previously stated revenue targets would be met.
Last week, AOL admitted that it may have overstated revenues at its America Online internet division by almost $50 million (see AOL Identifies Accounting Irregularities). It has now emerged that one of the deals being scrutinised involved the disgraced telecoms firm, Worldcom.
