Time Warner Plans To Spin Off Aol Division

April 30, 2009|By Mike Musgrove | Mike Musgrove,The Washington Post

WASHINGTON - Time Warner Inc. announced Wednesday in a filing with the Securities and Exchange Commission that it intends to spin off its ailing AOL division.

"Although the Company's Board of Directors has not made any decision," the company wrote in its latest quarterly report to investors, "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."

Time Warner's net income dropped 14 percent over the same period a year ago, mainly because of dropping revenues at AOL but also because of a suffering publishing business.

AOL owns Baltimore-based Advertising.com.

Tech industry analysts had, for years, speculated that Time Warner would spin off AOL; the two companies merged in 2001 with the idea that AOL's strengths as a new media company could benefit an old media company like Time Warner, and vice versa. But few synergies ever arose from the marriage. Even AOL founder Steve Case, who is no longer with the company, has said that he believes the two companies should be separated.

Talk of a split between the two companies was renewed in March when Time Warner ousted AOL's two top executives and placed former Google executive Tim Armstrong at the top of the company. In an all-hands meeting with AOL staffers after he was named to the post, Armstrong exhorted the company to "get America back online" and said that AOL's Dulles, Va., office, the company's original headquarters, would be at the heart of a new wave of innovation.

Meanwhile, tech pundits have continued to speculate that Armstrong had been brought on board to spin off the company. Earlier this month, Time Warner proposed to debt holders a change in terms of more than $12 billion in loans.

Under the proposed revision, filed with the SEC, Time Warner would guarantee AOL's debt with assets from its HBO division instead of AOL.

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