Time Warner to Spin Off AOL, Undoing Failed Merger
Time Warner Inc. will spin off the entire AOL Internet unit by the end of the year, reversing a failed $124 billion merger that triggered record losses. AOL’s online advertising and Internet-access businesses will be separated into an independent, publicly traded company, New York-based Time Warner said today in a statement.“A separation will be the best outcome for both Time Warner and AOL,” Chief Executive Officer Jeffrey Bewkes said in the statement. “The separation will also provide both companies with greater operational and strategic flexibility.”
Bewkes is getting rid of AOL, which has confronted falling ad sales during the recession, to focus Time Warner on its film and cable-television businesses. AOL has dealt Time Warner a series of setbacks since the 2001 deal: shareholder lawsuits, a regulatory probe and declining sales.
The parent company wasn’t able to sell or find a partner for the unit after talks last year with Google Inc., Yahoo! Inc. and Microsoft Corp.
“The obvious implication of spinning out all of AOL in one entity is that Time Warner’s efforts to sell AOL failed,” Fred Moran, a Boca Raton, Florida-based analyst at Benchmark Co., said in an interview. “Now, as a last resort, Time Warner is looking towards spinning the whole company out.”
