Stock analysts were sharpening their pencils this week after word came
that Time Warner would consider spinning-off America Online in the future to help finance new acquisitions.
The media conglomerate’s CEO Richard Parsons told
investors Friday at its annual shareholders’ meeting in New York
City that the company had discussed options of setting an initial public
offering for AOL, but so far have not moved forward with any such plans.
“If we get to the point where consolidation is happening in the Internet
space, the possibility of an IPO is out there,” Parsons told shareholders.
Time Warner discussed with AOL management the possibility
of selling shares of the online unit in an initial public offering, but
decided to hold off “at this point,” Parsons said.
AOL purchased Time Warner in January 2001 for $112 billion, during
what is now considered the height of the dotcom bubble. However, the move
proved to be a costly one as the bust of the Internet strained the fiscal
relationship of the two divisions.
The purchase led to record losses and caused shares to nose dive. In
2002, less than a full year after the purchase, the company recorded a $99.7
billion loss.
And to make matters worse in the strained relationship, Time Warner was
forced to pay $510 million in criminal and civil fines to settle a
federal fraud case stemming from allegedly shady advertising deals within
America Online.
The government accused AOL
of parsing out money to smaller Internet companies who in turn purchased ad space
with AOL. The scheme was allegedly devised to make the company appear
healthier financially, and enable the organization to exaggerate its growth.
AOL Spokesman Nicholas Graham referred internetnews.con to Time Warner
for comment. Time Warner did not return a request for comment.
