Shake-up could presage ‘stand-alone’ AOL

The recent overhaul of AOL’s senior management has set the internet group up to be run as a “stand-alone company” if that proved an attractive future option, Jeff Bewkes, president and chief operating officer at Time Warner, said.

In comments that appear to open the door to a spin-off of AOL, Mr Bewkes said the strategic shifts implemented at the division in August were resulting in increased use of the web portal and that by the middle of next year it would be possible to project AOL’s future earnings, which have been in decline for years.

“AOL might benefit [from a spin-off],” Mr Bewkes said at an investor conference. “[But] there is too much upside for us to [sell it] right now … AOL needs a bit of a track record and better projectability,” he said, adding this would probably happen by the middle of next year.

Mr Bewkes, who took over operational control of AOL a year ago and is regarded as the likely successor to Dick Parsons, Time Warner’s chairman and chief executive, pushed through a strategy that made AOL’s e-mail and software free.

AOL, which grew in the 1990s by enabling internet access through telephone connections, still provides dial-up access but the business is declining as broadband internet connections proliferate. Until August, users who ended their dial-up connections also lost the use of AOL e-mail.

The offer of free e-mail has led to increased use of AOL web pages by customers who switched to broadband connections, and has also attracted millions of new customers. As a result, advertising revenues have grown sharply, up 46 per cent in the last quarter.

Mr Bewkes said AOL would have 18m users by the end of the year, the first time in four years that this number has not declined. Last month, Time Warner hired veteran NBC Universal executive Randy Falco to become chairman and chief executive of AOL.