Summary:

It’s not quite the first day of the rest of their lives — that will come when the split is official — but Time Warner CEO Jeff Bewkes want…

Jeff Bewkes
photo: AP Images

It’s not quite the first day of the rest of their lives — that will come when the split is official — but Time Warner CEO Jeff Bewkes wants analysts and investors to start looking at AOL and Time Warner as two different companies, even breaking out the results as though AOL is already separate. One reason: more than half of Time Warner’s 6 percent revenue decline for Q3 is the result of the continued access subscription declines at AOL (NYSE: TWX). Bewkes called the planned spinoff, still expected by the end of the year despite the lack of regulatory approval so far, “an important milestone for both companies.”

Another reason: AOL has gone about as far as it can go for now. Time Warner CFO John Martin said between the paid search declines, the ad environment and the current structure, AOL faces margin and earnings pressure “for some time.” It’s hard to see how anything less than a radical overhaul will change the picture for AOL on its own.

Better for AOL, too: But AOL will start life on its own debt-free. Asked during Q&A about the prospects for the spinoff, Martin said, “We remain fully committed to complete the spin because it’s our firm view AOL is going to be better off on its own.” Time Warner is letting AOL go debt free because “we want to make sure AOL is in best position to succeed.” Bewkes talked about AOL plans for an investor road show in next couple of weeks that should provide more insight.

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