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Time Warner to Split Up AOL: Report


Yesterday’s WSJ story is now official: Reuters is reporting that Time Warner plans to split AOL’s dial-up ISP and advertising businesses into separate divisions by early 2009, which could aid in a sale or merger of both pieces. The company has done well in the quarter, but not because of AOL; instead, it reported strong cable TV ad sales for ‘Sex and the City,’ CNN, and other properties.

The report said that the AOL split underlines Time Warner’s aim to create content rather than distribute it; this would seem to signal a shift away from online and mobile initiatives as well. “As we continue to reshape Time Warner, we’ll increasingly focus on our goal to create and manage high-quality branded content,” CEO Jeffrey Bewkes said yesterday. The company also plans to separate from Time Warner Cable, the company’s Internet and cable TV distribution arm.

“A separation of AOL would eliminate what’s been a drag on growth and a management distraction,” said Christopher Marangi, associate portfolio manager at Gabelli & Co, a Time Warner investor, in the report. “We look forward to hearing more about structural alternatives there.”

(Image credit: Nicholas Roberts/Reuters)

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