Time Warner-AOL demerger good for both companies, say analysts

Time Warner's decision to spin off AOL bodes well for the Internet company as well as Time Warner, according to industry analysts, writes Mohan Kakanadan

US media and entertainment giant Time Warner's decision to spin off AOL bodes well for the internet company as well as Time Warner, according to industry analysts.

Time Warner yesterday revealed its plan saying that the separation will enable them to focus to an even greater degree on the core content businesses. (See: Time Warner to spin off AOL as an independent company). ''After the proposed separation is complete, AOL will compete as a standalone company, focused on growing its Web brands and services,'' chairman and CEO Jeff Bewkes said. 

The new AOL will include the web access business, web publishing and social networking including Bebo, and the Platform-A advertising programme, while Time Warner will focus on TV including HBO and CNN, Warner films and its magazine publishing business.

According to comScore Media Metrix, AOL's Web sites, which include celebrity gossip site TMZ and tech blog Engadget, averaged 106 million unique US visitors each month during the first quarter - a drop from 110 million visitors in the first three months of 2008.

The company ranks fourth for traffic, with Google, Yahoo Inc. and Microsoft Corp. claiming the first three spots.

''At least the demerger gives AOL some independence from a bad situation,'' technology analyst Rob Enderle was quoted as saying in the Washington Post on Thursday.