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AOL Time Warner

(AOL)

said Monday night it is restructuring its cable TV partnership with

Advance/Newhouse Communications

.

The restructuring, which had been expected, will cut AOL Time Warner's cable TV subscriber count of 12.9 million by 2.1 million, or 16%, at a time when rival

Comcast

(CMCSK)

plans to bulk up by merging with

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AT&T's

(T) - Get AT&T Inc. Report

operation to create a behemoth double the size of AOL Time Warner's cable properties.

Once Advance/Newhouse assumes management responsibility later this year for 2.1 million of the partnership's subscribers in Florida, Alabama and other states, the financials for those cable systems will cease being reflected in AOL Time Warner's books. That, according to AOL Time Warner, will cut its net debt and reduce the revenue and operating income from its cable systems division.

The separation of the cable systems won't be complete, says AOL Time Warner, since the Advance/Newhouse systems will remain in the cable partnership and AOL Time Warner will continue to provide certain management functions, including programming, for all of the cable partnership's systems.

AOL Time Warner's shares, which gained 44 cents Monday to close at $15.50, gained another dime in after-hours trading once the restructuring with privately held Advance/Newhouse was announced.

Had the partnership been rejiggered before the first quarter of the year, the revenue for AOL Time Warner's cable operations would have been $350 million lower -- 17% less -- than reported in the first quarter, according to AOL Time Warner. The cable segment's earnings before interest, taxes, depreciation and amortization, a common media industry bottom-line measurement, would have been lowered by $160 million, or 19%.

AOL Time Warner's net debt -- long term debt amounted to $28.4 billion as of March 31 -- would have been lower by $800 million at the end of the quarter.

As part of the transaction, AOL Time Warner will acquire Advance/Newhouse's interest in the Road Runner high-speed cable Internet service, a transaction that, if it had taken place before the first of the year, would have increased the cable segment's quarterly revenue by $25 million and decreased its ebitda by $30 million.