Time Warner to split off AOL

Time Warner CEO Bewkes calls separation 'best outcome' for both companies.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Aaron Smith, CNNMoney.com staff writer

AOL chief executive Tim Armstrong.
AOL chief executive Tim Armstrong.

NEW YORK (CNNMoney.com) -- Time Warner unveiled plans Thursday to spin off AOL as an independent company, an end to the massive media marriage formed in January 2001.

"We believe that a separation will be the best outcome for both Time Warner and AOL," said Time Warner chief executive Jeff Bewkes, in a prepared statement.

The $111 billion merger between AOL and Time Warner was applauded at the time as a visionary attempt to meld old media with new media. But synergies between the two never materialized.

Time Warner's (TWX, Fortune 500) stock has plunged nearly 80% since the merger. The company's stock closed at $23 on Wednesday, down from $99.49 on Jan. 10, 2001, the day before the merger, adjusted for splits and dividends (see correction at end of story).

Time Warner currently owns 95% of AOL and plans to purchase the remaining 5% stake from Google (GOOG, Fortune 500).

During the past several years, as AOL has steadily lost subscribers for its dial-up Internet access business, it has made several attempts to focus on Internet advertising.

"Becoming a standalone public company positions AOL to strengthen its core businesses, deliver new and innovative products and services, and enhance our strategic options," said AOL chief executive Tim Armstrong, a former Google executive who took over in March.

Bewkes described the separation as "another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content business."

Hamilton Faber, analyst for Atlantic Equities, said the companies are better off going their separate ways. "I certainly do think that both companies will be better off as independent entities," said Faber. "Neither company will be detrimentally impacted by not being part of the same group."

In March, Time Warner completed the spinoff of Time Warner Cable.

Even with that and the break with AOL, Time Warner will remain one of the largest media companies in the world, with cable networks, magazines and a movie studio. It is also the parent of CNNMoney.com.

The company owns the networks CNN and HBO, as well as the Warner Brothers movie studio and a wide array of magazines, including Fortune, Time and Sports Illustrated.

Correction: According to the Time Warner corporate Web site, Time Warner's stock price on Jan. 10, 2001 closed at $99.49. An earlier version of this story listed the closing price as $115.13.  To top of page

Features
They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Sponsors
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.