NEW YORK (AdAge.com) -- The Time Warner board has approved the spinoff of AOL as an independent, publicly traded company, undoing the disastrous merger between the two in 2001, which came to be a symbol of failed synergy between content and web distribution. It also positions Time Warner for a return to its roots: as a dedicated content company.
The spinoff is targeted for the end of the year, after Time Warner buys back the 5% stake in AOL it doesn't own from Google, which it says it will do in the third quarter of 2009. The deal follows Time Warner's spinoff of Time Warner Cable earlier this year.
"The separation is another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content businesses," Time Warner CEO Jeff Bewkes said in a statement.
The board vote settles the immediate future of AOL, which will retain its legacy dial-up business and is in the midst of a reorganization under newly appointed CEO Tim Armstrong. Mr. Armstrong recently reorganized a few of his deputies: He replaced Platform-A chief Greg Coleman, and People Networks President Joanna Shields left earlier this week. He is reported to be knitting AOL's major units tighter together and re-emphasizing the AOL brand.
Mr. Armstrong, who joined AOL from Google in March, recently convened a two-day meeting of 80 department heads and is in the midst of a 100-day evaluation of all business lines with an eye toward consolidating some and eliminating others.
As a stand-alone company, AOL has one of the largest ad networks in the business and a formidable display ad business that rivals Yahoo and Microsoft. But it has been hit hard in the recession; ad revenue at AOL was down 20% in the first quarter of 2009.