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New York (NY) – Time Warner is widely expected to announce plans to spin off its AOL division today.
The move has been expected for some time, and the Wall Street Journal reports that the board is expected to meet today and finalise the deal. But with a shareholders’ meeting also scheduled for later today, the company is keeping tight-lipped.
One issue that will need to be resolved is what to do with Google’s five per cent stake in AOL. Google paid a cool $1 billion for the stake back in 2003, but has since written down the investment to just $274 million.
Chief Executive Jeff Bewkes is believed to want to focus the company more closely on its core business of film and television, and the company has alsready spun off its cable TV arm into a separate company.
In March, Tim Armstrong, then an advertising executive with Google, was hired as AOL CEO, a move which Time Warner indicated was a precursor to a spin-off. Since then, several senior staff have left, including AOL People Networks President Joanna Shields, whose departure was announced yesterday.
Time Warner’s ownership of AOL was never a great success. After the 2001 takeover Time Warner was forced to write down the value of AOL by nearly $100 billion a year, and it has struggled to get advertising. Talk of selling AOL to Microsoft or Yahoo came to nothing.