Time Warner to hive off AOL's internet and advertisement businesses

Mumbai: Time Warner Inc is planning to split AOL's internet and advertising businesses into two separate divisions by early next year, as the US media conglomerate shifts focus to its contents business.

Created by the $164 billion mega-merger of Time Warner and AOL in 2001, the world's largest media group is now looking at selling one or both parts of its internet business as online business drags.

Time Warner also reported a lower quarterly profit, despite strong advertising sales from its cable TV networks such as CNN and films division.

AOL revenue fell 16 per cent in the second quarter, reflecting a 29 per cent drop in subscription revenue as it lost 604,000 subscribers. It had around 8.1 million US subscribers at the end of the quarter.

Time Warner's second-quarter net income fell 26 per cent to $792 million, from $1.07 billion a year earlier, that included gains from the sale of its interest in Bookspan.

Revenue rose five per cent at $11.56 billion. Time Warner expects full-year adjusted operating income before depreciation and amortisation to rise seven per cent to 9 per cent.

Online advertising revenue rose 2 per cent, as growth in offsite ads offset a decline in onsite display ads on AOL. Operating income fell 36 per cent.

''As we continue to reshape Time Warner, we'll increasingly focus on our goal to create and manage high-quality branded content," chief executive Jeffrey Bewkes said.

The company had plans to shed its cable services division, Time Warner Cable, by the end of the year. The group has also been in talks to merge AOL advertising business with either Yahoo Inc or Microsoft Corporation.

EarthLink Inc also last week signaled that it could be interested in buying dial-up businesses.