It's Official: AOL to Become Stand-Alone

AOL man

Like the U.S. under G.W. Bush, AOL will stand alone. As expected, Time Warner today announced that it would break AOL off into a separate and independent entity, which will be publicly traded. Time Warner owns a 95% stake and Google owns the remaining 5%, which it paid $1 billion for in 2005. Time Warner will buy back Google's stake in the third quarter of 2009, Time Warner's Board of Directors decided Thursday morning -- a move that will happen before AOL can be cut loose.

Both Time Warner Chairman and CEO Jeff Bewkes and AOL Chairman and CEO Tim Armstrong (who will run the new AOL) released platitude-heavy statements about how the move is forward-looking, and will provide greater flexibility moving forward. They left out how they just want to take it one day at a time and that they were just there to help the team, but offered up the basic boardroom equivalents.

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Talk of the separation was prompted by precipitous drops in AOL's ad revenue over the last two quarters -- 18% in fourth-quarter 2008 and 20% in the first quarter of 2009. "Driving the decrease in advertising revenues were declines in sales of advertising on third-party Internet sites, as well as display advertising and paid-search advertising on AOL Network sites," read Time Warner's most recent earnings report.

According to a spokesperson, the new entity will include the dial-up service that first drove AOL's success.

The jaw-dropping $147 billion AOL once dropped to buy Time Warner seems a long way away (as does the bubbly economic climate of 2001 that produced it).

Armstrong, who was brought from Google (where he was ad chief) to replace Randy Falco as AOL's top dog in March, is tasked with finding the new AOL's way in a world where it is neither top online publisher, or ISP, or services provider -- a world, in short, that may no longer have a place for cheery "You've got mail" messages.

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