Time Warner’s board announced that it has given the green light for management to proceed with plans for the complete legal and structural separation of AOL from Time Warner, according to a statement.
Time Warner Chairman and CEO Jeff Bewkes said: “We believe that a separation will be the best outcome for both Time Warner and AOL. The separation will be 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 businesses. The separation will also provide both companies with greater operational and strategic flexibility. We believe AOL will then have a better opportunity to achieve its full potential as a leading independent Internet company.”
The overall structure of AOL is expected to be revamped completely. AOL will focus on media, “scaled” advertising, and communications. Bebo, a social networking site acquired by AOL, Userplane social media apps unit, and its Truveo video search service will be relocated into AOL ventures.
AOL Chairman and CEO Tim Armstrong indicated that the focus will return to promoting the AOL brand rather than other brands within the AOL family. Today, Time Warner owns 95 percent of AOL, and Google holds the remaining 5 percent. As part of the agreement, Time Warner expects to purchase Google’s 5 percent stake in the company during the third quarter in 2009. At that time, Time Warner shareholders will own 100 percent of AOL.