|February 6, 2008|
|Hats off to Time Warner CEO Jeff Bewkes for plans to finally unload the AOL albatross|
|By Kevin McCauley|
|Time Warner’s new CEO Jeff Bewkes is putting the world’s biggest media combine back on track with word today that he willing to bite the bullet and begin the process of undoing the disastrous AOL acquisition. |
He told investors that TW plans to split AOL’s access business from its growing online advertising segment. That’s the strategy that TW followed in Europe. [AOL acquired buy.at, an online affiliate marketing network, on Feb. 5 to beef up its advertising business.]
The challenge for Bewkes: Who wants any part of AOL’s subscription business, an entity that is pulling off one of Corporate America’s greatest disappearing acts?
According to TW’s financials, AOL suffered a 33 percent decline in `07 revenues to $5.2B due to a whopping 52 percent decrease ($3B) in subscription sales.
Subscription revenues nosedived due to the divestiture of AOL’s Internet access business in the U.K., France and Germany plus the realization among Americans that they can get AOL’s e-mail, software and other products free as long as they have a hook-up to the `Net. Why would anyone subscribe?
In its glory days, AOL boasted a subscription base in the 25M range. It had 9.3M subscribers at the end of last year. That’s down 740K from the earlier quarter and off 3.8M from the end of `06.
Bewkes faces pressure to move quickly because there may not be much of AOL left due to its impressive rate of decline.
Wall Street cheered the AOL spin-off plan. TW’s beaten up stock “surged” more than three percent to $15.88 on the news, still well off the $21.97 52-week high.
Google owns a five percent stake in AOL. Bewkes may save himself the headache connected with the complicated split-up process by wooing the Google guys as white knights for AOL.
The acquisition price of AOL would be a pittance for Google, and far, far below the $45B that Microsoft is prepared to spend for Yahoo!
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