Analyst Time Warner’s A-Changin’

Banc of America Securities media analyst Jonathan Jacoby reiterated his “buy” rating on Time Warner Inc., adding in a research note that chairman and CEO Dick Parsons, the focus of much speculation in recent months, is expected to step down by the end of this year or the beginning of next year.

Parsons, whose contract expires in May 2008, has said he would like to hand over the CEO reins to current Time Warner chief operating officer Jeff Bewkes. However, Parsons has said publicly that the decision is ultimately up to the company’s board of directors.

In his report titled “The Times They Are A-Changin’ ” Jacoby said that more changes are expected Time Warner’s AOL online unit.

While Jacoby wrote that the focus is currently on operational improvements and expense reductions at AOL, “over time, we expect Time Warner to sell the dial-up assets and look to either IPO AOL or use it as a currency for a transaction.”

He added that the fate of its publishing unit “will depend on the success of its Internet strategy and/or the need for the segment’s stable cash flow.”

Jacoby also noted that recent moves in the cable segment — particularly its desire to sell its 12.5% interest in a partnership with Time Warner Cable — could lead to an eventual separation of TWC from Time Warner Inc.

But Jacoby warned that change takes time and that he does not expect much upside to his estimates over the next several quarters.