AOL: When I Was Born the Doctor Slapped My Mother
AOL is the Rodney Dangerfield of the Web. It don’t get no respect.”
America Online acquired Time Warner for roughly $106 billion in stock and debt back in 2001. “I don’t think this is too much to say: This really is a historic merger, a time when we’ve transformed the landscape of media and the Internet,” former AOL chairman and CEO Steve Case said at the time. “Time Warner will offer an incomparable portfolio of global brands that encompass the full spectrum of media and content.”
And it did. Problem was, AOL didn’t turn out to be one of them. And now, Time Warner (TWX), which struggled for years to turn AOL into the “digital media powerhouse” it was supposed to be, is planning to divest it. When the company reports second-quarter earnings Wednesday, it is expected to reveal that it’s separated AOL’s declining Internet access and advertising businesses. And that’s the first step in unloading one or both of them.
But who will buy the Rodney Dangerfield of the Web? Well, Time Warner has been and continues to be in informal talks with both Microsoft (MSFT) and Yahoo (YHOO) regarding AOL. Earthlink (ELNK) too is a possibility here. In an interview with The Wall Street Journal last week, CEO Rolla Huff said a merger of AOL’s dial-up business with EarthLink’s would be a wise move. “We think it’s worth aggressively pursuing,” he said of such a deal. “We believe we’re best-positioned to be the consolidator in this industry. When an industry reaches a point of maturation and growth stops, it simply makes good economic sense to consolidate onto one cost platform.”