Time Warner CEO Jeffrey Bewkes has occupied the company’s top chair for only about a month, but in an earnings conference call to investors he outlined a vision for the company that includes splitting off the operating units of AOL and possibly even separating out the company’s cable division.
“Looking forward we’re trying to grow our customer usage and extend the competitive position of our advertising platform,” Bewkes said during the call. “Doing these two things should allow us to take advantage of continued growth in online advertising. At the same time we need to complete AOL’s business model transition so we’re working on separating AOL’s access and audience businesses so we can run them independently.”
AOL’s so-called “audience business” includes AOL’s significant online content offerings as well as its online advertising business, the latter of which has been the primary focus of the company since 2006. AOL’s Internet services group, including its dial-up business would be separated out and potentially sold off…assuming a buyer can be found. Although recent estimates indicate about 1 in 10 U.S. households use AOL as their primary Internet service, but the company has seen its subscriber base drop by 29 percent in the last year, and revenues drop by an even greater percentage. Nonetheless, metrics firms report that AOL has a significant share of users who access its Internet portal exclusively: where Google can count about 40 percent of its users as exclusive GOogle users, AOL is a close second with 33 percent of its users relying on AOL exclusively.
Google owns a five percent stake in AOL.
Time Warner’s cable business is another matter: it posted strong profits for the quarter and anticipates maintaining a healthy revenue stream. The issue for the parent company Time Warner is the continual investment in infrastructure to drive that revenue. Time Warner owns about 84 percent of the cable unit, with the remainder controlled by investors.
