Time Warner Board Backs AOL Spinoff

Time Warner's announcement on Thursday that it will spin off AOL was the much-anticipated divorce filing for a multibillion-dollar corporate marriage that came to symbolize an entire era in American business but that had long been acknowledged as a failure. The split, which Time Warner executives have said for months was coming, gave a last echo of the dot-com bubble, which burst in the months after the merger was announced. That deal, one of the biggest in history, came at the height of a national infatuation with Internet and media stocks, a time whose reasoning is hard to recall after living through the ensuing bust and boom and in the depths of a severe recession. For three years, AOL has been steadily getting out of the business of paid Internet service, becoming more reliant on advertising sales, but that strategy has been hampered by the worst advertising slump in generations. AOL has about 6 million paying subscribers in the United States, down from 13 million at the end of 2006. Last year, for the first time, subscription revenue was smaller than ad revenue. Over all, AOL had $4.2 billion in revenue last year, down from $9.1 billion in 2002. Time Warner as a whole, including the cable unit that is now a separate company, had $47 billion in revenue last year.