Time Warner’s AOL Sales Plummet - Gets Split into Two - Microsoft & Yahoo Look Interested!
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For months, Time Warner has been exploring options for the two sides of America OnLine (AOL), including whether to sell or combine the businesses in a partnership with other companies. However, the discussions have been held back by uncertainty about how revenue and liabilities would be split between the two sides, which complicated putting a value to the businesses.
Well, it’s finally done! Jeff Bewke’s Times Warner has completed the “internal works” necessary to break off AOL’s original business – dial up internet access – from its advertising and content business, reported by Wall Street Journal. As the potential buyer for its dialup internet business, EarthLink is reported to be eyeing the dial-up industry.
The AOL split underscores Time Warner’s focus on creating branded content rather than distributing it. The company has said that it also plans to shed its cable services division, Time Warner Cable, by the end of the year, in a separation that will yield USD 9.5 billion. Although there has been no word on how the company might be interested to spend the cash, officials say that Time Warner could pursue global acquisitions in TV and online networks or even in entertainment production companies.
Amidst all the hullabaloo, Google Inc fears that its $ 1 billion investment in advertising partner AOL is under stress. Google also acknowledged that it might have to recognize a loss on its 5 percent stake in AOL, whose struggles have made it a financial albatross for its owner, Time Warner Inc. Some analysts have suggested AOL may be worth less than $10 billion now. Google didn’t estimate in its SEC filing what it believes its stake to be currently worth.
While the two units were combined, a potential acquisition was difficult as buyers struggled to find a proper channel for both the parts. By splitting the two, Warner can now seek interest from separate buyers and potentially increase the yield from the sale. Both Yahoo and Microsoft have expressed interest in the AOL online advertising division, should that happens, it would provide the respective company significant ground in the ongoing battle against search engine behemoth, Google.
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