When the Time Warner – AOL deal originally went through, the talks were hot about getting rid of the AOL division, as it was a weight on the other divisions, and not delivering its share of the total revenue.
Then the talk stopped. No one outside AOL and Time Warner knew why. It may have been that a reprieve was given to allow AOL to become profitable again – after it was once a money-making powerhouse. Once was the time when AOL was a cash cow, with money oozing from every pore – that was before the days of broadband. When broadband came along, even co-location could not get AOL competitive with the Baby Bell ISPs.
Now, once more, the jungle drums outside the Time Warner camp are beating, saying that the time is right to sell off AOL. When the company was restructured in 2006, moving to a free access model supported by advertising, the paid user base declined sharply – a 59% loss compared to the high water mark of 2002. While there is that dial-up base still around, the company doesn’t push it any longer, and apparently advertised support isn’t working out the way the company had hoped.
The sale is not a certainty yet. If the new location – a move from Reston, Virginia to New York City – works out, and the new ad support fees roll in, along with the new features, like BlueString, take off, the sale might once again be put off.
AOL appears to believe it is inevitable that the ISP revenue will dwindle quickly, so the losses must be replaced with this new efforts gains.
Two things –
Does AOL know something about high speed access that we don’t? In the past 3 months the stories of how poorly the U.S. fares in terms of access availability and speed have been rampant. Is some yet unknown company going to commit to a massive fiber-optic build out?
Is there some other reason that their ISP (dial-up) dollars will dwindle due to something else? Do they know something about what is happening with the Whitespace Coalition? Have the T-W-AOL executives bribed the right people at the FCC?
For the first, news could happen at any time. The second will require a wait until 2009, when there really is whitespace to be had – because no matter what happens with the upcoming sale, it won’t really be over until we get to see what actually takes over those frequencies.
[tags] AOL, Time Warner, rumors of sale, Whitespace Coalition, fiber-optic cable, dial-up access [/tags]