Time Warner Approves AOL Spin-Off
By Zachary Rodgers , May 28, 2009
Earlier this year, Time Warner took the first steps toward spinning off AOL. Yesterday the board endorsed that plan and authorized CEO Jeff Bewkes to move forward to jettison its Web advertising and Internet access businesses.
After a separation, AOL would be an independent, publicly traded company. It would consist of a dial-up access business that is still among the largest in the U.S.; the AOL.com portal and other in-house properties such as Bebo and TMZ; and ad network Platform-A, which boasts a greater than 90 percent reach among U.S. Web users, according to Comscore.
"The separation will be another critical step in the reshaping of Time Warner that we started at the beginning of last year," Bewkes said in a statement. "The separation will also provide both companies with greater operational and strategic flexibility."
For advertisers, who were exposed to few if any synergies between AOL and other Time Warner businesses, the changes resulting from a spin-off will likely be few.
However, AOL CEO Tim Armstrong is reportedly preparing some significant structural transformations at the company, including the creation of a Ventures unit to house the company's Bebo social networking platform and other recently acquired sites and services. According to BoomTown, the new unit is meant to attract outside investments.
Armstrong stated AOL will leverage its independent status to accelerate its recruiting efforts. "We play in a very competitive landscape and will be using our new status to retain and attract top talent," he said. "Although we have a tremendous amount of work to do, we have a global brand, a committed team of people, and a passion for the future of the Web."
As part of the preparations for a spin-off Time Warner will re-acquire the 5 percent of the AOL business it sold to Google in 2006. The remaining 95 percent of AOL already belongs to Time Warner shareholders. Time Warner said it hopes to complete the legal and structural separation of AOL by end of year.