Time Warner to split AOL division apart, buy Google stake in company

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US media giant Time Warner, which also owns news channel CNN and Time Magazine, has announced today a move that has been widely seen for years, it will be spinning off AOL and will make it its own independent company, allowing both companies to focus on different things.

“We believe that a separation will be the best outcome for both Time Warner and AOL. The separation will be another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content businesses,” Time Warner’s CEO and Chairman Jeff Bewkes said in a statement.

“The separation will also provide both companies with greater operational and strategic flexibility. We believe AOL will then have a better opportunity to achieve its full potential as a leading independent Internet company.”

Before the spin off can happen, Time Warner has announced that it will purchase Google’s five percent stake (as under a prior arrangement) sometime in the third quarter of 2009, and it will then spin off the company at the end of the year.

This move now puts the nail in the coffin for the embattled AOL/Time Warner combined company, created before the internet bubble burst. It is also noted that AOL – called America Online back then – bought Time Warner in 2001 to create the largest media company. That, however, failed as it did so poorly after the merger that the company dropped the AOL part of AOL Time Warner to being just its current name.

AOL has struggled to gain some market share, from dial up to search market share. It has, however, managed to create some of the top visited sites in specific niches – like Engadget, The Unofficial Apple Weblog and GameDaily. It has also a powerful publishing management system, Blogsmith, and has Bebo under its wing – where it is popular in Europe.

AOL, however, has still continued to be the largest online messaging network in the world – with over 60 million users on AIM and ICQ.

In the later part of last year, it reorganised several of its companies into three distinct groups – A Platform, MediaGlow and People Networks – allowing the departments to be more defined in what they do. The A Platform mainly has all of its advertising assets; while People Networks has most of its user interaction sites, AIM and Bebo.

MediaGlow, the largest department in terms of sites, including many of its hundreds of blogs, AOL News, Winamp, My AOL, Propeller (a Digg clone), AOL Music and MovieFone.