Time Warner to separate AOL service following drop in profits

Time Warner Inc. has announced that they will be running AOL’s access and audience businesses separately from next year; the main reason for this is a drop in their profits. When Warner has managed to get the units operating separately from each other, then they will be able to work out if the cash flow is better.

Once the access is a stand alone, Time Warner will then have the flexibility to spin the business around or even sell it if it comes to it. Time Warner said that second quarter net income had fallen by 26 percent from their AOL and publishing units.

During the second quarter AOL’s shares fell to $1.1 billion, most of that loss has been from the loss of dial-up subscribers. This is a direct result of AOL trying to make the transition from an Internet-access provider to a business primarily driven by advertising revenue from AOL.com.

The growth in advertising in the second quarter for AOL saw a 1 percent increase from the first quarter. To give you an idea at just how bad this is, Ad growth in the fourth quarter of 2007 was 10 percent, it was 13 percent in the third quarter of 2007. So there is a pattern that things have been falling for some time.

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