STILL TRUST AOL?

Time Warner Board Approves AOL Spinoff; Dial-Up Business To Remain With AOL

By David Kaplan - Thu 28 May 2009 05:36 AM PST

As expected, Time Warner (NYSE: TWX) (NYSE:TWX) confirmed that its board of directors has authorized the spinoff of AOL—making the internet unit an independent, publicly traded company following the proposed transaction. And, as we reported would be the case, AOL will keep the online-access subscription service.

Time Warner hopes to conclude the spinoff, which requires an SEC review, by the end of the year. The company also expects to buy back Google’s 5 percent stake as part of completing this transaction but there is no confirmation that Google (NSDQ: GOOG) has agree to the terms or whether a agreed-upon valuation has taken place. The news sent Time Warner stock up slightly higher in pre-market trading.

Time Warner Chairman and CEO Jeff Bewkes said: “We believe that a separation will be the best outcome for both Time Warner and AOL. The separation will be another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content businesses.” More from TW in the release and later this morning during the company’s annual meeting.

The move takes place at the roughly the midway point of new Chairman and CEO Tim Armstrong’s “100 days” plan to assess AOL. Over the past few weeks, Armstrong has made some key personnel moves, including forcing Greg Coleman out as head of advertising, replacing him with his former Google colleague Jeff Levick in the broader role of head of AOL’ global advertising. And this past week, Bebo’s Joanna Shields stepped down as president of AOL’s People Network, following clear signals that her role and resources were to be diminished..

All of this will pave the way for a tighter, more integrated AOL. Under former CEO Randy Falco and COO Ron Grant, AOL had been separated into three distinct units: MediaGlow programming; People Networks, which in addition to Bebo, includes the instant messaging service AIM; and the once robust Platform-A advertising unit, which has fallen on hard times with the decline of display advertising. AllThingsD’s Kara Swisher reports that only MediaGlow will keep its autonomy, with Bill Wilson remaining as president.

Swisher also reports that Bebo and other acquisitions including Truveo and Userplane will be placed in AOL Ventures, with AOL trying to get venture capital investments for them. How Bebo will be carved out after a year of integration is unclear.