CEO: AOL Will Stay With Time Warner

Squashing rumors that AOL is on the auction block, Time Warner says it remains committed to AOL, according to comments made by CEO Richard Parsons at a Goldman Sachs media conference. Parsons told attendees that he thought the driver for the company "is going to be AOL in the short term and the long term."

AOL has had a rough go of it since its merger with Time Warner in 2000. The firm was the subject of investigations and lawsuits by the federal government and shareholders alike, leading up to the removal of "AOL" from the combined company's name.

The company has also been steadily losing millions of subscribers. As dial-up access -- AOL's key business -- is dumped in favor of broadband, consumers moved away from AOL onto other providers. Services like MSN effectively trumped the country's largest ISP by striking deals with cable operators and telcos before AOL could react.

However, with the return of Web advertising as a significant source of revenue for online services, AOL is aiming to replace its declining dial-up business with the revenues generated from advertisers.

Parsons says Time Warner will increase investment in the online service and would likely begin to report AOL revenues in such a way that would delineate the two revenue streams. Advertising is expected to make up about an eighth of AOL's total revenue for 2005.

Even more significant changes could be ahead for AOL, including the possible marriage of some of AOL and MSN's services. Although the subject of the talks has not been disclosed, it is believed to either center around the use of MSN Search on AOL, or a merging of the sales forces of the two services.

At the conference, Parsons refused to comment on the rumored talks with Microsoft.

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