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Time Warner To Hive Off AOL; Implications For AOL India

The board of Time Warner Inc has authorized the separation of AOL from the parent company: following the separation, AOL will be an independent and publicy traded company, and AOL will focus on growing its Web brands and services, and its advertising business, consolidated under Platform A. Time Warner owns 95% of AOL, while Google had bought 5%; Time Warner intends to buy this stake back before separating AOL.

timarmstrong-smallOf late, AOL has hired a number of Google executives – including Chairman and CEO Tim Armstrong(pictured right), President of Global Advertising and Strategy Jeff Levick. People Networks President Joanna Shields had quit a couple of days ago. AOLs international operations are headquartered in Bangalore, India, and Maneesh Dhir, EVP (International) at AOL, had also put in his papers earlier this year.

According to AllThingsD‘s sources, it’s unlikely that AOL will make any acquisitions after the spinoff.  Bebo, Truveo and other start-ups that AOL has bought will be a part of AOL Ventures, operating separately, and AOL will will try and raise venture funding for them companies. The MediaGlow content business will get additional investment and still be run by Bill Wilson.

Interestingly, it appears that the access business, which was earlier expected to be hived off, will remain a part of AOL. AOL is among the largest ISPs in the US, and it appears as if the Access business is going to remain a part of AOL.

Implications for AOL India

“There are two ways to sell a company. One is to conserve cash, which AOL was doing earlier, and the other is to build it into a business worth buying”, an industry source told MediaNama.

The India portal was launched two years ago, and costs have apparently been kept on a tight leash at AOL, particularly when it comes to marketing and brand building. Although the company has subsequently launched products for India – versions of Asylum magazine, a South Indian segment, local language content, Truveo search for India, Bebo (earlier this year) – they haven’t really tried to market these, or build a brand. Only one TV advertising campaign, almost a year ago, comes to mind. Not everyone agrees with the idea of spending on marketing products like Bebo in India though.

AOL as a separate company would hopefully herald renewed focus on product development and deployment, apart from an increased focus in building a brand, and creating a sellable property.

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“The separation”, Time Warner Chairman and Chief Executive Officer Jeff Bewkes said “will also provide both companies (AOL and Time Warner) with greater operational and strategic flexibility. ”

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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