Will Bewkes Usher In Change At TW?

Time Warner No. 2 Jeffrey L. Bewkes is set to succeed Dick Parsons as company CEO as soon as Jan. 1, five months shy of the latter's contract expiration. Many on Wall Street view Mr. Bewkes as something akin to a corporate action hero likely to break up Time Warner, jump-starting its long-stalled share price. A breakup would likely involve the long-overdue separation of Time Warner from its perennially beleaguered Web portal, AOL.

Time Warner's stock is down 15% for the year; investors believe the company to be in a kind of purgatory, driven partly by a conservative board and an ineffective CEO. Bewkes' pending appointment has made some analysts bullish on Time Warner's stock. Lehman Brothers, for example, recently gave Time Warner a "buy" rating, citing the company's "compelling valuation" and the much-needed restructuring that would surely come under Bewkes.

While the appointment of Bewkes as CEO may be a foregone conclusion, a period of drastic change is not. Wall Street seems to want an AOL spinoff, in addition to Time Warner Cable and the Time, Inc. magazine unit, leaving Time Warner as a "pure play" content company with cable TV and film assets. However, Bewkes may hesitate in ringing in the changes, in part because of new technology. For big content providers, DVRs and Internet TV still present a daunting challenge. Monetizing digital content is still a huge problem, which makes the prospect of stripping Time Warner all the more daunting.

Read the whole story at The Wall Street Journal »