Is Time Warner looking to ditch AOL?
Will Head writes…
It was only seven years ago that pesky upstart AOL merged with established media heavy weight Time Warner, with AOL making up 55 percent of the new company to Time Warner’s smaller 45 percent share.
Spin on through a dot com bust, a mass reduction in the cost consumers pay for an internet connection and an overall flattening in internet company values and it looks like Time Warner could be looking to shake off AOL for good and forget the whole thing ever happened in the first place.
It didn’t take long for the honeymoon to end, with AOL Time Warner having to report a loss of $99bn in 2002 and the blame being clearly levelled at the bit beginning with A. As way of punishment its three letters were unceremoniously dropped from the beginning of the merged company name.
Now it looks like if AOL doesn’t pull its socks up, it could be set adrift completely. While Time Warner Chief Executive Richard Parsons said that he was encouraged by AOL’s progress, he didn’t guarantee that it would still be part of the family forever.
“Eventually, five years down the road, it’s conceivable to me that because of the way that business grows … There could come a point in time when there’s two separate stand-alone companies,” he said.
AOL is desperately trying to restructure itself as an advertising and media company, rather than one that takes a set fee per month from its customers in exchange for providing internet access and a bit of extra content thrown in.
However the guys at AOL face a much tighter deadline if they want to stay pally with the folks at Time Warner – a decision about its immediate future would be made by Christmas. “By the end of this year, we can make the call on AOL (on whether) we have found a business model or approach that can result in sustainable growth over time,” Parsons said. The clock’s ticking.
