It's not every day that a company simultaneously weans its cable subsidiary and divests its baseball team. But that's precisely what Motley Fool Stock Advisor pick Time Warner
In a marginally complicated transaction, Time Warner Cable effectively became a public company on Tuesday, when the reorganization plan of former cable operator Adelphia took effect. Tangential to the plan, Time Warner distributed 156 million of its shares -- about 16% of the company's total share count -- to Adelphia stakeholders. In exchange, and in conjunction with cable industry leader Comcast
Because the distribution of its shares was tied to the Adelphia reorganization, Time Warner was able to withdraw its S-1 registration for a traditional initial public offering of a portion of its cable company. Time Warner owns roughly $6 billion worth of former Adelphia assets.
Time Warner Cable has been trading on the NYSE Group's
Adelphia filed for bankruptcy reorganization nearly five years ago, after disclosing that its founding Rigas family had saddled the company with $2.3 billion of off-balance-sheet-debt. Founder John Rigas and his son Timothy were convicted of fraud and sentenced to 15 years and 20 years in prison, respectively. They are currently free while awaiting appeal.
Time Warner Cable, as a separate company, will be able to participate more directly in the strength the cable industry has evidenced for the past year. Aside from Comcast, other publicly held cable companies include Cablevision
Turning from TV to baseball, Time Warner divested the Atlanta Braves, which it acquired in the 1990s with its purchase of Turner Broadcasting, to Liberty Media
Amid this flurry of activity, I'd like to point out two personal observations. First, I like and respect Time Warner CEO Robert Parsons' performance in paring the company's non-core assets. And second, Time Warner looks like a superb operator that should bask in the cable industry's strength for years to come.
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