Time Warner moves closer to AOL split
Published: 05 Aug 2008 09:14 BST
Time Warner has moved a step closer to splitting up AOL's business, The Wall Street Journal reported on Monday.
Time Warner is expected to announce on Wednesday that it has completed the internal process of separating AOL's dial-up internet-access business from its advertising business, the newspaper said.
Time Warner has been talking about splitting the company into two different entities for some time. It has been a main focus of Time Warner chief executive Jeff Bewkes, who took over as chief executive seven months ago. AOL has long been viewed as a problem for Time Warner, as its dial-up business declines and its advertising business struggles to compete.
Time Warner has been examining several options with respect to splitting up the company, including selling off both pieces of the business or partnering with other companies.
Separating the business has proven problematic as the company tries to figure out how to divide revenue, staff and liabilities. Earlier, Bewkes had said he expected to have the process completed by the end of the second quarter. Time Warner will announce second-quarter results on Wednesday.
Once the separation of AOL's advertising-content and dial-up businesses is concluded, it may aid potential suitors like Yahoo and Microsoft in sizing up an offer price.
After Microsoft announced its unsolicited bid for Yahoo in February, the web giant reportedly turned to Time Warner and its AOL division for an alternative deal.
AOL continued to talk with Yahoo as the on-again-off-again Yahoo-Microsoft buyout talks continued and later expanded to involve a potential AOL-Microsoft deal.
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In the past few weeks, talk of a potential merger between AOL and Yahoo, or AOL and Microsoft, has quieted down, following a truce between Yahoo and investor activist Carl Icahn, who was waging a proxy battle with the hope of pushing Yahoo and Microsoft to do a deal.
In the latest AOL-Yahoo turn of events, Time Warner stopped any plans for former executive Jonathan Miller to serve on Yahoo's board, citing his no-compete clause.
Rolla Huff, chief executive of US internet service provider EarthLink, said last week, when the company announced its second-quarter earnings, that it is interested in buying AOL's dial-up business. Huff gave no specifics, but said that AOL's 8.7 million subscribers would provide a big revenue boost to the company. EarthLink currently has only 2.2 million dial-up subscribers.
Even though dial-up is a dying business, it still generates cash and a predictable revenue stream, which makes AOL's dial-up business particularly attractive to EarthLink, and potentially other dial-up providers.
CNET News.com's Dawn Kawamoto contributed to this report.
Credit: Time Warner steps closer to AOL split from CNET News
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