Time Warner Inc.’s profits took a big first quarter hit this year as its AOL (News
) division continued to drag down earnings under the continued strain of flailing advertising sales, according to the company.
While the company’s earnings dropped 14 percent over the same period the previous year, the media giant still managed to beat Wall Street expectations.
However, in a move that many Wall Street analysts and industry insiders have been urging for years, following the news of its poor showing Time Warner (News
) announced this morning in a filing with the Securities and Exchange Commission that it intends to spin off its sagging AOL division.
"Although the Company's Board of Directors has not made any decision," the company wrote in its latest quarterly report to investors, according to a report
in the Washington Post, "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."
In 2001, Time Warner merged with AOL expecting to develop a host of synergies by creating a new media company on the back of an old publishing empire. However, the pairing never fulfilled expected potential
In recent years the pressure to dump AOL has come from many quarters, even AOL founder Steve Case suggested the companies be split.
As TMCnet reported, last year the idea of ditching the online division picked up steam and plans to merge or sell its AOL Internet division with Microsoft (News - Alert) Corporation or Yahoo took on new urgency.
The New York-based Time Warner, already feeling pressure from a sluggish economy and flailing divisions, spun off Time Warner Cable Inc. in March.
In Q1 2009, the company earned $661 million, or 55 cents per share, for the period ended March 31, down from the year-earlier result of $771 million, or 64 cents per share.
Revenue dipped seven percent to $ 6.9 billion in the first three months of the year but on earnings of 45 cents per share, Time Warner still managed to beat the 38 cents per share forecast by analysts.
Time Warner shares rose 6.84 percent on Wall Street following the release of the results to $23.26.
“With our separation of Time Warner Cable, Time Warner has become a more content-focused company,” said Chairman and Chief Executive Officer Jeff Bewkes, in a statement. “We’re also working to determine the right ownership structure for AOL. With our powerful brands, industry-leading scale, track record of innovation, heightened focus on efficiency and strong balance sheet, I’m confident that we’ll continue to make progress toward our key long-term goals – to be the world’s leading content company and improve returns to our stockholders.”
Tim Gray is a Web Editor for TMCnet, covering news in the IP communications, call center and customer relationship management industries. To read more of Tim’s articles, please visit his columnist page.
In addition to its online division, Time Warner owns Time magazine, Turner Broadcasting (News
) and HBO.
Edited by Tim Gray