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AOL yet to decide on sale of cable unit

Sun Valley, July 12 (Reuters): AOL Time Warner Inc. may choose not to spin off its cable division since it can meet its debt reduction plans without the move, chief executive and chairman Richard Parsons said on Friday.

While Parsons said plans remained in place to spin off the unit in an initial public offering near the end of this year, the media giant was not bound to the sale as it has other avenues to reduce its debt.

In addition to an IPO of Time Warner Cable, the company has considered selling sports teams and parts of its music business to reduce its debt from around $ 26 billion to $ 20 billion in 2004.

“There are a lot of moving parts,” he told Reuters on Thursday at a retreat for media executives and investors sponsored by Allen & Co. in Sun Valley, Idaho.

In April, Parsons had said the media conglomerate expected a cable spin-off in the second-half of the year rather than this summer as previously expected.

At that time executives said probes by the Securities and Exchange Commission and the justice department into the company’s online unit could stall SEC action on its cable spin-off plans.

Parsons said he still expected the cable initial public offering around the end of the year although the company had not “pulled the trigger.” A final decision on the unit would be based on strategic considerations, he said.

Microsoft Corp. in May unexpectedly agreed to pay AOL Time Warner $ 750 million to settle an antitrust suit, which would help lighten the debt load, Parsons said.

Asked whether a different deal might include property swaps with No. 1 cable operator Comcast Corp., which owns 21 per cent of Time Warner Cable, Parsons said he would not rule out anything, but that no such talks had begun.

Comcast stands to reap nearly $ 8 billion from its decision to sell its stake in shopping network QVC to Liberty Media Corp., which eases pressure on it to raise cash. It has also led investors to question whether it might prefer a different type of deal for Time Warner Cable than an initial public offering.

Chief executive Brian Roberts on Thursday declined to discuss the Time Warner Cable spin off, although he said the Liberty deal gave the company financial room to consider new ways to expand.

One media investor at the Allen & Co. conferences said there was debate on the issue inside AOL Time Warner, as executives considered whether keeping the unit would open other avenues to expanding the company’s influence in cable.

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