Posted April 29, 2009 10:10 am by with 5 comments

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The more you read about the trouble inside Time Warner the more you have to admire Tim Armstrong for ditching his comfy job at Google for the top job at AOL.

In quarterly numbers just released, Time Warner’s revenue dropped 7% from 2008 to $6.9 billion, with AOL being the biggest culprit for the decline–it saw a drop of 23%!

Clearly AOL’s just not thriving under the wings of Time Warner and it now seems inevitable that the division will be spun-off as a separate entity. Reading between the lines, you suspect that Armstrong was all but promised that AOL would be released from Time Warner. Speaking to Ad Age, Armstrong said:

"The understanding of the value of brands at AOL has gotten a little gray over time," he said in front of a crowd of ad agency CEOs, adding that the intense scrutiny of the company has had a negative affect. "The questioning from the outside" has actually bruised the company internally, he said. "There are cases where we have tens of millions of people touching a brand every day," but people inside AOL have forgotten the need to improve the products behind those brands.

I suspect that the people inside AOL are either content to be a part of the Time Warner juggernaut or feel that so constrained by it, they don’t have the enthusiasm needed to get AOL to where it needs to be. Either way, AOL needs a shake-up!

Still, there is hope for AOL. Time Warner CEO Jeff Bewkes hinted at a possible spin-off for AOL in yesterday’s earnings announcement:

With our separation of Time Warner Cable, Time Warner has become a more content-focused company. We’re also working to determine the right ownership structure for AOL.

Like I said, why would Armstrong make the giant leap for mankind his career, if he wasn’t promised that AOL would be released from Time Warner?

  • I have a personal contact within AOL who is pretty excited about the new direction and energy that Armstrong is bringing to the brand. Of course, the possibility of being spun off and out from under the TW umbrella is exciting enough in its own right. I never thought I would think this but maybe there is some life in AOL but they will have a lot of work to do to define themselves in the marketplace since no one is truly aware of what they are today.

  • Perk

    AOL = Compuserve.

    I believe that the game is over for AOL even with a tremendous amount of investment.

    AOL’s strength was a universal access vector that happened to have good enough content for a captive audience. Those days are long gone. AOL has not been successful in a competitive content environment and AOL cannot support the current overhead even with a wildly successful Internet content scheme.

    It will continue to die a slow death or at least shrink to a small shadow of its current self.

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  • AOL is dying slowly ” non recusandae.”