Time Warner is Looking to Spin off AOL – Can it Survive on its Own?

Business schools around the world often study the January 2000 merger of Time Warner & AOL under the headline “Worst Mergers In American Corporate History”. It is not unusual, or unnatural for content creation companies to enter the distribution market, but AOL and magazine publishing arm Time Inc. have dogged their parent companies earnings for years now. Looking to cut its losses, Time Warner announced on Wednesday that it was close to spinning off America Online, an acquisition that has cost the company more than $100 billion in shareholder value.

According to the filing; “Although the company’s board of directors has not made any decision, the company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner’s stockholders, in one or a series of transactions.” When asked about the future of Time Warner, CEO Jeffery L. Bewkes claims the future “may well include publishing” but made it clear that this could change at any time. The company is likely holding out on making any decisions about Time Inc. until the recession eases and it can see if weakening print sales are a result of the recession, or the shift of its readers to online mediums.

Time Warner has already spun off it's cable division, and is clearly looking to focus on content creation, rather than delivery. I also can't help but wonder whether or not an independent AOL would become an acquisition target for Microsoft. The ad network was one of the primary drivers behind the Yahoo talks, and this is one area that AOL still does reasonably well in.

Can AOL survive on it's own? Let us know what you think.