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SPIN OFF AND PERHAPS MORE: Is Time Warner Inc. finally cutting its AOL business loose? In a filing with the Securities and Exchange Commission, the company said it plans to spin off the ailing AOL division to shareholders, although it was noted the board has not made a final decision. During the first quarter, AOL revenues fell 23 percent to $867 million. Time Warner also reported first-quarter earnings on Wednesday, adding it has initiated talks with Google about acquiring back its 5 percent stake in AOL. In late January, Google requested AOL register the 5 percent equity interest for sale in an initial public offering. Now, Time Warner has the right to purchase Google’s stake for cash or shares of Time Warner stock, in lieu of the IPO.
As for Time Warner’s publishing segment, Time Inc., the division reported a 30 percent drop in ad revenue. The food, pharmaceuticals and automotive categories were particularly difficult during the quarter, and Jeff Bewkes, chairman and chief executive, reported that 15 percent of domestic ad revenue at Time Inc. is now coming from digital. He predicted a further shakeout in magazine publishing, but said the business isn’t as challenged as newspapers, since readership is growing, magazines have a national reach and they don’t rely on classified advertising. At the end of a call with analysts, which was largely about AOL and its Networks business, Bewkes avoided making any future claims to Time Inc.’s place in the company, adding, “Time Warner may well include publishing but we’re not making a religious statement about it either way at this point.”
Meredith Corp. also reported third-quarter earnings on Wednesday, with publishing ad revenues down 12 percent, to $132 million. Ad performance in seven of its top 10 categories improved, compared with the first half of fiscal 2009, including food and beverage, prescription and nonprescription drugs and household supplies. The company expects fourth-quarter ad revenues to be down approximately 12 percent.
— Amy Wicks