Time Warner Ceo Mulls AOL Spin-off

19 May 2005

US media titan Time Warner might turn back the clock to cut the ties that bind it to the nation's largest internet service provider America Online.

Ceo Richard Parsons says he is mulling the spinoff of AOL, a move that would undo one of the most troubled unions of recent years.

Parsons revealed his thinking in an interview with Fortune Magazine. He says he would consider letting go of AOL if the present growth strategy failed to produce results.

That strategy centres on the imminent launch of a free internet portal, which will include a search engine and other functions previously available only to AOL subscribers.

The move aims to increase traffic and capture a greater share of the booming market in online advertising. But, says Parsons: "If this doesn't work, then you start to think about AOL much differently."

He adds: "You start to think about AOL in somewhat the same way I think about the cable company - we'd have access to the platform, but it would have its own currency to go out and do acquisitions or other deals. We'd have to find a way to maximise the value for our shareholders."

AOL and TW announced their marriage in 2000 and consummated it a year later just as the dotcom bubble burst, sending stock values into freefall.

Parsons gave no hints of a timescale for a separation scenario and a company spokesman was quick to point out: "Management is very supportive of AOL and its strategy."

Well, perhaps not that supportive ...

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