Time Warner wants to split two AOL businesses

LOS ANGELES (Reuters) - Time Warner Inc (TWX.N) is working on splitting AOL's audience and access businesses and running the two as independent entities, Chief Executive Jeffrey Bewkes said on Wednesday.

"This should significantly increase AOL's strategic options," Bewkes told analysts on a conference call.

Bewkes also said the company's 84 percent ownership stake in Time Warner Cable Inc (TWC.N) is "less than optimal" for both companies. He said the two companies are talking about operating improvements and changes to the ownership structure.

The company expects AOL's advertising revenue for the first quarter of 2008 to be "essentially flat to down slightly" versus the year-earlier quarter, Chief Financial Officer John Martin said.

Martin said AOL's "costs will continue to be reduced and advertising should continue to grow" starting in the second quarter of 2008.

"The results of all this is that we continue to expect AOL to maintain its overall profitability on a considerable scale," Martin said.

AOL's fiscal 2008 adjusted operating income before depreciation and amortization was likely to approach fiscal 2007 levels, the company said.

AOL's access business is its dial-up Internet service, while audience is its portal and advertising business.

Martin said it will take "several more months" to separate the AOL businesses "because it's fairly complicated."

(Reporting by Gina Keating; Editing by Brian Moss)