[Infowarrior] - Time Warner to Spin Off AOL Division

[Richard Forno]

Time Warner to Spin Off AOL Division

By Mike Musgrove
Washington Post Staff Writer
Wednesday, April 29, 2009 11:38 AM

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/29/AR2009042902156_pf.html

Time Warner Inc. announced this morning 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.

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 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 debtholders 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.