Time Warner Prepares to Spin Off AOL

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The New York Times reports that Time Warner is “inching closer” to separating from America Online, which it merged with in 2000.

“Although the company’s board of directors has not made any decision, the company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner’s stockholders, in one or a series of transactions,” the company said in the filing.

The announcement, which was not unexpected, came on the same day that the company reported first-quarter earnings, which surpassed Wall Street analysts’ expectations. But the numbers for both AOL and Time Inc. were equally dismal.

…the company (may) wait to see how much of Time Inc.’s troubles (are) because of the cyclical nature of the economy and how much (is) permanent because of the flight of readers to the Internet.

If Time Inc. were eventually to be lopped off, Time Warner still would include several profitable cable networks — TNT, TBS, CNN and HBO — as well as the Warner Brothers movie studio. It would be in keeping with Mr. Bewkes’s stated vision of Time Warner as a company centered on producing television and movies for a mass audience.

“Today, we are a much more content focused company,” he said.

My guess is that Time Warner will spin off Time, Inc. as well. In fact, AOL, which wants to build a 21-century media empire, will probably be happy to step in with its own new products if AOL kicks Time to the curb. If, that is, AOL can figure out a way to fund its new projects.

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  • John

    kind of funny. AOL uses its dot-com era cash to buy TimeWarner, then promptly moves their name to the end. Now they are trying to decide whether to rid themselves of the aging icon that gave them the cash in the first place (AOL) or one of the giants of the rapidly fading print industry (Time).
    It is probably to late to rehabilitate AOL into a portal to TimeWarner’s online media (a la go.com), so they’re better off without that one.
    They should also keep the online media of Time and spin off a boutique printing company to serve those who still want their dead tree edition.

  • I remember when AOL merged (bought?) Time Warner and thought to myself how this was going to end badly. AOL was on the verge of losing a substantial amount of business because people realized they did not need AOL to get to the internet. There were far better ways. If AOL got rid of that client of theirs and focused on better content, it would have been a different story.