Summary:

Updated: Looking for clarity when it comes to Time Warner (NYSE: TWX) and AOL? So are we — Time Warner is exploring just about every variat…

Updated: Looking for clarity when it comes to Time Warner (NYSE: TWX) and AOL? So are we — Time Warner is exploring just about every variation you can imagine when it comes to AOL, based on the exchange CEO Jeff Bewkes just had with UBS moderator Aryeh Bourkoff, who asked the questions in just about every way possible. The short answer: “I’d like to get it resolved, meaning clear… so AOL can be seen and valued… We need to do it fairly soon and we’ve been working hard on it.” And, no, he won’t translate “fairly soon” into a real time frame.

Bewkes isn’t complaining about operations and said if AOL were a TV network, “he’d say the ratings are up. ” But, he admitted to investors, ad sales are not up the same way and have been disappointing to us and to you.” AOL’s performance is further hampered by being “essentially in third place” and not a market leader. “Because of that, even though some excellent work is being done on cost cuts, programming and traffic,” AOL’s value is being lost. The questions: what would be the improvement in economics from a combination and would the result be “reasonably as good or better” than TW can do with any other option? More on a possible spinoff and AOL Access after the jump

Elephant stomp: Bewkes was frank about discussing alternatives with Google (NSDQ: GOOG), its current search partner and stakeholder, Microsoft (NSDQ: MSFT) and Yahoo; after all, as he said, it’s in the paper every two days. “We need to assess — as does any of those three counterparties — what would be the improvement to economics of making either a commercial or a merger arrangement with pieces of AOL? From our side, is the result reasonably as good or better than what we can do operating it, spinning it or taking certain pieces of it and letting those go into combinations with one of those other three companies.” He laughed, “You have some very big elephants walking around in the forest.”

SpinCo? Bourkoff, who is on the banking side of UBS, asked if it was simpler to spin off AOL Audience to shareholders and “have that noise sort of go away from strategic thinking and have that growth highlighted as a public vehicle instead of part of Time Warner?” Bewkes replied wryly: “You know, we never think about what’s easier. We just think about what will provide the most resources to that enterprise and if it was separate focus, maybe that would be the right answer.”

The content option: During the Q&A, Bewkes made a point of mentioning how AOL fits in Time Warner as a content business, adding, “that doesn’t mean we have a religious view of having to operate it. we will do whatever creates the best value realization.” After the session, I asked Bewkes about one possibility: keeping the content from AOL. (Given the recent re-org of Time Inc, it could even fit in there, especially the new products AOL has been more successful with online content launches then its print/digital sibling. The competing verticals would be more of a challenge.) His reply: “It’s consistent in the way that it operates with the way CNN operates. It creates digital pages and it sells ads for them. They are branded pages on AOL News, AOL Finance, Mapquest, etc. That’s no different, really, than CNN having a page. You don’t need … if the question is do you have to have AOL to operate CNN Digital, no, you don’t.” Would he like to keep AOL’s content? “AOL’s content is growing in audience and ad sales and we’re happy that that’s the case. We said at great length we might or might not combine that to get it to be more valuable with somebody else.”

AOL Access: As for the access business: “AOL Access produces a lot of earnings and cash flow — it

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