Time Warner Takes America Offline, Will Officially Split Access From Audience Business

In another bold step out of the distribution business, Time Warner, the world's largest pure-play media company, announced plans to become purely about content, announcing formal plans to spin-off the online access business of its AOL unit. The move, which follows Time Warner's decision to also separate from broadband and cable TV distribution service Time Warner Cable, will help it transform into a company focused on creating and managing, "high-quality branded content, across multiple platforms around the world, at the highest returns possible for our stockholders," CEO Jeffrey Bewkes said as part of a second quarter earnings released issued this morning.

Details of AOL's access spin-off are expected to be outlined as part of a Time Warner earnings call with investors later today, but the earnings report shows that AOL has been the most lagging of Time Warner's operations, and in dire need of some restructuring.

While Time Warner's overall revenues rose 5% to $11.6 billion during the quarter, AOL's declined 16% to $1.1 billion, reflecting a 29% decrease in subscription revenues, which was offset, in part, by a 2% gain in advertising revenues.

The decline in subscription revenues was due primarily to a decrease in domestic AOL brand subscribers, resulting from AOL's strategy to offer its e-mail and other products free of charge to Internet consumers. Advertising revenues benefited from growth in sales of advertising on third-party Internet sites and paid search advertising, offset partly by a decline in display advertising on AOL Network sites.

During the quarter, Time Warner said AOL had 111 million average monthly domestic unique visitors and 56 billion domestic page views, according to comScore Media Metrix, which translates into 167 average monthly domestic page views per unique visitor.

As of June 30, 2008, the AOL service had 8.1 million U.S. access subscribers, a decline of 604,000 from the prior quarter and 2.8 million from the year-ago quarter, reflecting subscriber losses due in part to AOL's strategy to prioritize its advertising business.

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