After eight years media giant and internet provider to cut ties
by Adam Zarboni
In a business world that is trying to trim the fat, and create new partnerships among similarily aligned companies in order to cut production costs, Time-Warner and AOL have announced plans that they will be splitting up. Time-Warner, who purchased the company eight years ago announced on Thursday that it would be terminating its relationship with the company. Time-Warner’s Board of Directors has authorized their management to proceed with plans for the complete legal and structural separation of AOL from Time Warner. Following the proposed transaction, AOL would be an independent, publicly traded company.
“We believe that a separation will be the best outcome for both Time Warner and AOL,” said Time-Warner Chairman and Chief Executive Officer Jeff Bewkes. “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." Adding that "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. "
Once the separation is complete, AOL will operate on its own company – focused on growing its brands and services, and although it currently reaches more than 107 million domestic unique visitors a month, and is still one of the largest Internet access subscription services in the US, it has suffered declining subscriptions due to increased competition and the use of mobile devices.
“This will be a great opportunity for AOL, our employees and our partners,” said AOL Chairman and Chief Executive Officer Tim Armstrong. “Becoming a standalone public company positions AOL to strengthen its core businesses, deliver new and innovative products and services, and enhance our strategic options. We play in a very competitive landscape and will be using our new status to retain and attract top talent. Although we have a tremendous amount of work to do, we have a global brand, a committed team of people, and a passion for the future of the Web.”
Time Warner currently owns 95 percent of AOL, with Google holds the remaining 5 percent. Time Warner expects to purchase Google’s stake in AOL in the third quarter of 2009. Once this transaction is complete Time Warner shareholders will own all of the outstanding interests in AOL.
The transaction must still be approved by the Securities and Exchange Commission who must review securities regulations. Time Warner hopes to finish the separation by the end of the year.