Google's $1bn Christmas Gift to TW: An AOL Done Deal

21 December 2005

Amid a chorale of Hallelujahs from Time Warner executives - and a resounding 'Bah, humbug!" from somewhere in the region of Carl Icahn - TW and Google yesterday (Tuesday) inked a controversial deal that transfers to the latter five percent of America Online .

TW chief executive Richard Parsons hailed the $1 billion (€844.0m; £569.99m) deal as a key that will "realise the potential" of the ailing AOL - which, despite its woes, is still America's largest internet portal.

Google ceo Eric Schmidt sang from the same songsheet, lauding the agreement as "an important next step" for both companies. Carolled he: "Today's agreement leverages technologies from both companies to connect Google users worldwide to a wealth of new content."

Although a Christmas gift of money is seen by some as unimaginative, it is by far the most welcome present on TW's wish list. And Google, too is agog with excitement as it starts to rip the Santa wrappings from AOL's wealth of music videos, sports, news and other goodies.

But there are two small dark clouds looming over the Yuletide euphoria.

One is the ire of Time Warner's interventionist shareholder Carl Icahn. The corporate raider has threatened legal action if the Google deal impedes a future AOL merger with (or sale to) a third party.

The other cloud is the potential compromising of Google's unique brand proposition, its 24-carat integrity, by contracting to give AOL ads preferential placement.

Data sourced from Financial Times Online; additional content by WARC staff