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Updated: Time Warner Ready To Move On AOL Spinoff; Announcement Likely At Thursday Board Meeting

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The long-awaited spinoff of AOL is almost near, as Time Warner’s board of directors will make the final decision at tomorrow’s board meeting, paidContent has confirmed a TechCrunch report. Last month, Time Warner revealed the first step toward taking AOL independent when it filed a 10-Q saying the company would buy back the 5 percent of AOL that Google (NSDQ: GOOG) bought in 2006. The board is likely to approve the transfer of AOL’s assets into a new independent entity, to be followed by an IPO.

As TechCrunch notes, the one part that is still hanging in the air is whether the dial-up internet service will be separated from the new AOL or if it will remain part of the package. Although it now has only 7 million users, the dial up business does bring in $2 billion and $1 billion in free cash flow. Considering the struggles the ad business is going through, it would be hard for AOL to part with it, although it has no other material connection to the direction the unit has forged the last few years.

Staci adds: I have reason to believe that AOL will be spun off intact with the dial-up access business. It’s not just about cash — it’s about traffic and about giving AOL more control over its own destiny once it’s spun off. It’s worth noting that this vote is coming even though new AOL Chairman and CEO Tim Armstrong is only midway through his 100 days and has yet to announce his own plans for the company. Getting the spin-off question out of the way gives him the chance to frame those plans for a company on the verge of independence, instead of one that structured to work within Time Warner (NYSE: TWX).

2 Responses to “Updated: Time Warner Ready To Move On AOL Spinoff; Announcement Likely At Thursday Board Meeting”

  1. Still, earnings from their dial up business can help a lot during this global financial crisis. Most especially now, they are experiencing problems in advertisement.

  2. What AOL needs to do is find its own niche. Each major content provider is successful because it specializes in something. ie. MySpace = music, Facebook = sharing, Twitter = microblogging, Google = search. What is AOL best for? The answer to that is what they need to focus on.