Time Warner has announced that they will finally be splitting AOL into two units: its continually fading Internet access business, and the content and advertising business the company has recently been focusing on building. The move comes on the heels of Time Warner’s most recent earnings report, which showed a 32 percent decline in revenue at AOL, as the company lost another 740,000 dial-up Internet subscribers in the quarter and around 3.8 million over the past 12 months.
[img src="" caption="" credit="" alt=""]Meanwhile, AOL’s content and advertising business is clearly where the value lies in the company. AOL has made several high-profile acquisitions in the space, including Advertising.com, Quigo, and Tacoda. They’ve also added consumer and publisher facing services such as Userplane and Goowy, while their instant messenger product AIM remains the #1 tool in the category. I spoke with Michael Jones, the CEO of Userplane, about how the company plans to piece all of these parts together in their so-called “Platform A” strategy several months back.
What could be driving the decision to finally split these two vastly different businesses? According to the Associated Press, Google has the right to IPO their 5 percent stake in AOL this July. Google bought their stake for $1 billion in late 2005, which at the time valued AOL in its entirety at $20 billion.