05.29.2009 03:20 PM
Time Warner Plans to Spin AOL
NEW YORK: Time Warner is looking into spinning off AOL. Company chief Jeff Bewkes said today that a spin-out appears to be the best option for divesting the Internet unit, according to Reuters. A spin would divide Time Warner’s AOL stock among its own shareholders on a pro rata basis.
The plan to shed AOL comes just a month or so after the cable business was similarly spun out so Time Warner (NYSE: TWX) could focus on content. The company owns the Turner channels--CNN, TNT, TBS, Cartoon Network, etc.--as well as HBO, where Bewkes cut his teeth. It also has Warner Bros. studios and Time, Inc. publishing.
Spinning off AOL would end a relationship structured nine years ago by former Time Warner Chairman Jerry Levin, a veteran button-down TV executive who famously donned a polo shirt to announce the merger with AOL founder Steve Case. AOL was the quintessential Internet powerhouse at the time, dominating email use and dial-up Web access. As if by an occult hand, free browser-based service and ISP competition started to flourish. Levin’s vision of a massive, synergistic content-distribution system spruce goosed. Around $200 billion in shareholder value disappeared within a few years of the merger.
TWX shares got a small boost from the news, rising briefly yesterday from $22.80 to $23.74, before settling down today at around $23.25. In late 1999, just before TWX merged with AOL, shares briefly peaked at more than $270.-- Deborah D. McAdams