Primary Navigation Home U.S. Business World Entertainment Sports Tech Politics Elections Science Health Most Popular Secondary Navigation Tech Video Internet Gadgets Digital A V Security Apple Macintosh Linux Open Source Video Games Markets Search All News Yahoo News Only News Photos Video Audio Advanced Time Warner Will Split Off AOL Dial Up Business Jennifer LeClaire newsfactor.com hours minutes ago On Wednesday Time Warner said it will split off AOL s remaining dial up business. Led by newly minted CEO Jeff Bewkes the move comes in the face of AOL subscriber losses and reduced revenue. Bewkes shared the news during his first financial briefing with analysts since taking over at the beginning of the year. This should significantly increase AOL s strategic options he said. Bewkes is also considering reducing Time Warner s percent stake in Time Warner Cable but the buzz centers on the AOL split and the company s earnings. AOL s revenues declined . billion or percent to . bil! lion in . A decrease in subscription revenues drove those losses. Subscriber Woes Subscription revenues were affected by the sales of AOL s Internet access businesses in the U.K. France and Germany the company said as well as a decrease in domestic AOL subscribers . The U.S. drop partially reflects AOL s previously announced strategy to offer its e mail some software and other products free. As of December the AOL service had . million U.S. access subscribers a decline of from the prior quarter and . million from the year ago quarter reflecting subscriber losses as AOL focused on advertising revenues. Former Time Warner CEO Dick Parsons made it clear last September that the company would divest itself of the AOL access business at some point. The move aims to quicken AOL s migration from a dying dial up business to a thriving Internet advertising business. The company did not offer details on when the split will take place or what the company will look like when it does. Th! e Somewhat Silver Lining The news isn t all grim for AOL. The Internet portal saw an percent increase or million in advertising revenues in the fourth quarter. Advertising revenues benefited from growing sales on third party Internet sites as well as advertising on the AOL network . Still that growth is less than the industry average of percent tracked by the International Advertising Bureau. For comparison Google s ad revenue grew percent in its fiscal fourth quarter. Time Warner may be more likely to get buyers for its Platform A advertising business without the dial up division attached. The ISP business is still pretty lucrative. It s not what it was and it s been a drag on the company s outlook as a Time Warner subsidiary said Greg Sterling principal analyst at Sterling Market Intelligence. A would be buyer of the Platform A piece wouldn t want the other asset. They are now very separate assets. If you are going to sell either or both of these it makes sense. The market perception is that the dial up business revenues will decline substan! tially in the coming years as broadband becomes more pervasive. Even though it s a billion plus business Time Warner seems ready to cut its losses and focus on advertising. Whether the company will also sell its Platform A portfolio is uncertain. AOL has built an impressive collection of advertising technology and capabilities and its Platform A portfolio. I don t think all those companies are integrated into a single platform as its name suggests but that s AOL s ultimate ambition Sterling said. It s a very powerful combination which AOL says has the broadest advertising reach on the Internet. 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Source: http://news.yahoo.com/s/nf/20080207/tc_nf/58249
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