- The Washington Times - Thursday, July 30, 2009

Time Warner Inc. confirmed Wednesday that it plans to spin off its AOL Internet portal by the end of the year.

Time Warner revealed its intentions in a second-quarter earnings report that showed the New York media conglomerate earned $519 million (43 cents per share) in the three months ended in June. That’s down 34 percent from $792 million, or 66 cents per share, a year earlier.

AOL has been pummeled by ad declines as well as subscriber losses. Overall revenue at AOL dropped 24 percent to $804 million as the company lost 510,000 dial-up Internet access subscribers to end the first quarter with 5.8 million users in the United States.

Chief Executive Jeffrey Bewkes said Time Warner is on track to complete the spinoff of AOL “around the end of the year” but hasn’t decided how to capitalize the Internet portal.

On Monday, Time Warner said it bought back Google Inc.’s 5 percent stake in AOL for $283 million to pave the way for the separation. That gave the Mountain View, Calif., search engine a $726 million loss, which it had already written off in January.

As part of the 2005 deal, Google agreed to provide Web-search service to AOL and share in the ad revenue the inquiries generated. AOL, an online pioneer with roots in Sterling, Va., has agreed to use Google’s search services and sponsored links through at least December 2010.

AOL Chief Executive Tim Armstrong told employees last week that job cuts are possible as he undertakes a 60-day review of the Internet company’s cost structure. Mr. Armstrong, a former Google executive named AOL CEO in March, also plans to overhaul advertising and develop more local Web sites to help revive falling sales.

Time Warner shares fell 49 cents, or 1.8 percent, to close at $26.52 Wednesday.

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