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AOL To Phase out Kids Sites KOL and RED; No Further Investment Or Sale Planned

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So AOL is finally deciding on something…well, almost: AOL (NYSE: TWX) is phasing out its kids and teens businesses, KOL and Red, paidContent.org has learned. This comes six months after the company then decided to reinvest in the businesses, instead of spinning them off. No decision on imminent closure of the sites has been made, and couple of maintenance people will keep the sites alive, but no investment is being made into the division now. Not clear: whether this will involved any layoffs, or that the existing employees will be moved to other divisions. AOL PR has not returned calls and e-mails over this Labor day weekend.

Staci reported on two iterations of AOL’s thinking on the business in the last year: first was the idea to spin-off the division with an investor taking a stake (this was in Jon Miller era) and then as Ron Grant came in earlier this year, he decided against spin-off and decided to invest in the business, though not enough to grow it…the budget for kids & teens was cut substantially. Malcolm Bird, SVP- AOL Kids & Teens, left in March this year following the cuts, but not before an effort to try out to buy the business, sources say: some private equity investors were willing to buy out the business, with the idea being that AOL retains a large part, also invests in the business, and then gets regular royalties in return. The value of the business then was about $150 million and the investors were willing to put in close to $100 million. That didn’t happen…and now, it seems that bit of flirtation is also over, our sources tell us.

Meanwhile, Bird is now the co-CEO of a blank check media acquisition company called TM Entertainment and Media, according to SEC filings. TM has filed for an IPO on the American Stock Exchange to raise $72 million. Prior to AOL, Bird helped launch Nickelodeon UK, headed kids’ programming for USA Network station WAMI in Miami and led international programming for Cartoon Network, according to this USAT story. The other co-CEO in the venture is Ted Green, former CEO of Anchor Bay Entertainment, which then was a subsidiary of IDT Entertainment. Interestingly, Jon Miller is listed as a director of the blank-check company as well…Miller and Ross Levinsohn just announced a new media buyout fund (more on that here).

15 Responses to “AOL To Phase out Kids Sites KOL and RED; No Further Investment Or Sale Planned”

  1. Andre Mika

    It was a pleasure working with Malcolm, and the entire KOL team. The kid business isn't easy, and their ability to stay current while expanding the properties into tv was terrific. It's sad to watch AOL slowly dismantle a group of talent production professionals who were making a difference… best of luck to everyone.

  2. Jim Crosby

    I (the real Jim Crosby) did not write the previous post. Someone posted posing as me. Very classy. KOL and RED did some great stuff and it's a shame to see it going away. Good luck to everyone on the staff as you move on to your next adventure.

  3. Jim Crosby

    I personally think that Red and KOL did as awesome as the Hub! GO HUB!

    And I thought KOL was awesome with that non-open standard interface combining FDO91 and, uh, some no-name version of flash. Pure genius.

  4. Malcolm and Co.

    Sorry to hear about KOL and Red.

    There are plenty of other opportunities where you talents and expertise can be leveraged.

    The online experience for kids and tweens will continue to evolve and demand will most certainly triple.

    Sites like imbee.com, club penguin and others validate this.

    Best of luck with your new venture!

  5. This is just a sad state of affairs. Even as Bill Wilson applauds the success the dedicated RED and KOL teams have had in his weekly e-mails they are closing doors on these ventures. Heck, this week Wilson led the success of "weekly wins" with RED metrics.

    All past and present RED and KOL staff should be incredibly proud of the work we did. Mal gave us the ball and ran with it. Could you ask for anything more? Unfortunately Mr. Bird left to pursue new ventures so did the soul of the products no matter how much effort those teams put in.

    I echo Adam Dubov's sentiments "The road is long and there's still much good work to be done on the web." One can hope that whiel there may again bea big red button but that some day soon there will be a home for "Splat!!"

    Cheers,
    Jonny

  6. Adam Dubov

    It's a shame to see KOL and RED go – they were truly among the best, innovative and energetic parts of the AOL offering. During my stint at AOL Broadband it was my honor and privilege to collaborate with the KOL and RED teams on some key initiatives and some truly groovy tent-pole programming. KOL and RED, you will be missed. Best of luck to the remaining team – the road is long and there's still much good work to be done on the web.
    Warmest regards,
    AD

  7. Geoff Dover

    This is really a shame to hear! KOL and RED were excellent platforms, and I believe had lots of potential. The people that I had the pleasure of dealing with there were all excellent in my opinion.

  8. Malcolm, CareTALK(tm) knows how hard it is to cultivate an online community , even with AOL's resources. The heart and soul the staff at KOL and RED poured into these franchises was evident, and they are all owed a debt of gratitude for attempting to fulfill the promises network television has defaulted upon season after season, year after year, decade after decade — for our children. Good luck with your new venture(s).

  9. Malcolm Bird

    I think this is very sad, and to be honest could have been so easily avoided. I applaud all the staff at KOL and RED for what they have built and achieved and this move by AOL is no reflection on them. Somewhere, sometime in the future there will be another Big Red Button!!!