Time Warner CEO: Sale of AOL's ISP Division Likely

By Ed Oswald, BetaNews

September 18, 2007, 4:51 PM

Time Warner is "looking hard" at selling off the internet access portion of its AOL division over the next 12-18 months, Time Warner CEO Richard Parsons said on Tuesday.

NEW DETAILS Rumors have been floated in the past about a sale of AOL's US ISP business, but up until now Time Warner -- including Parsons himself -- had denied that it was even a possibility. Parsons did admit earlier in the year that he had been approached by several groups looking to buy the ISP.

AOL was restructured last year to a free ad-supported service, with its ISP taking a backseat to its web-based efforts. While the company still sells dial-up Internet access, it does not market it actively. That refocus has caused a steep decline in subscribers to 10.9 million as of June 30, down some 59 percent from its 2002 high.

Such a sale in the past was not feasible, as the company's ISP was tied into its web properties to a significant degree. Without the ISP traffic, the company would stand to lose much more than it would have gained due to the fact that pageviews would have dropped significantly, thus cutting into ad revenues.

However, now with a much larger portion of its traffic being generated from sources outside the service, such a setup is now more feasible. Parsons said a deal would still be complicated, and not as easy to part with as its AOL Europe ventures.

Whether or not it actually happens is probably dependent upon how successful the company's new advertising efforts are. On Monday, the company announced a relocation to New York City to be closer to the center of the online advertising market.

It also unveiled Platform A, which combines its strengths and properties across a variety of online and mobile advertising properties. If this becomes successful, losing revenues completely from ISP traffic will be much easier to bear.

"The focus right now is let's see if we can build it," Parsons said of AOL, likely indicating Time Warner wanted to take one more shot at seeing if the business could work as is. He also resisted calls for the breakup of his own company, saying he believed for the time being the company as a whole "is greater than the sum of its parts."

Representatives for AOL had no comment on Parsons' remarks, or what it meant for the service itself.