In the heyday of the dotcom boom, Time Warner purchased the then massive internet service provider AOL, and the firms merged into AOL-Time Warner. The deal was brokered by then CEO of AOL Steve Case and Time Warner CEO Gerald Levin.
It took very little time for the merger to prove to have been ill advised as AOL began rapidly losing customers to broadband and poor customer service. In 2000 when the merger was completed, Time Warner paid $182 billion in stock for the company and the merger was hailed as creating the world's greatest digital media powerhouse. Time Warner is now considering spinning AOL off into its own company reports InformationWeek.
Time Warner said in an SEC filing, "The company currently anticipates that it would initiate a process to spin off one or more parts of the businesses of AOL to Time Warner's stockholders, in one or a series of transactions." The company did point out that it has not yet made any decisions on the fate of AOL.
InformationWeek reports that former AOL CEO Steve Case believes AOL should be spun off into its own company again. AOL has hired a new CEO, Tim Armstrong, who told AOL employees in a memo that he would be embarking on a 100-day tour and a review of the company.
Armstrong wrote, "The culmination of the 100-day process will end in Dulles [AOL's ancestral headquarters] with an all-hands meeting in mid-July. At that meeting, we'll review the feedback we've received -- both internal and external. ... Most importantly, we will set a course and focus all of our resources to make that course a success."
Time Warner CEO and Chairman Jeff Bewkes said that during the 100-day tour Armstrong would be looking to improve the AOL business and evaluating to see if AOL would be better off as its own company.
Time Warner has said that it will purchase the 5% of AOL back from Google. Google purchased its 5% stake in AOL for $1 billion in 2006. Time Warner has been fighting other fires within its holdings recently as it tried to force tiered Internet pricing on customers only to be forced to drop the attempt after pressure for consumers and lawmakers.
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