Time Warner confirms AOL will be split in two

07 Aug 2008 10:00

The internet-access and media units will be split next year, with speculation mounting that Time Warner will soon divest itself of AOL altogether

Time Warner will split its AOL internet-access and media units starting next year, chief executive Jeff Bewkes has confirmed in a release announcing the company's second-quarter earnings.

The split has been widely talked about for months since Bewkes mentioned it speculatively earlier this year. Some expect that Time Warner will soon get rid of AOL altogether, perhaps selling it to a bigger player in the online-advertising market.

It was another tepid quarter for the online-service-turned-media-company, which saw revenues drop 16 percent, to $1.1bn (£564m). Advertising revenues were up two percent to $8m, although display-ad revenues on AOL-owned sites were down, but that business still isn't big enough to offset the losses from AOL's internet-access service.

Once a US mainstay, the provider lost 604,000 subscribers in the second quarter alone and is down 2.8 million from the previous year, leaving it at 8.1 million subscribers. That's a $200m loss and 29 percent drop for the company, which had raised fees on the dial-up service in late June.

Operating income at AOL dropped 36 percent, to $230m.

Reports have suggested that internet provider EarthLink may be interested in acquiring the internet-access business from AOL.

Story URL: http://news.zdnet.co.uk/internet/0,1000000097,39458170,00.htm