Time Warner Inc. chairman and CEO Richard Parsons told attendees at the annual shareholders meeting in New York on May 20 that while there’s no need to spin off the America Online unit in the near term, that option’s being kept open.
Parsons told Fortune magazine that spinning off AOL would be considered if the online giant does not capture as much of the Internet-advertising market as expected.
But at the annual meeting, Parsons said any AOL spinoff would only be made if Time Warner saw an opportunity to participate in the consolidation of the Internet space.
He likened it to the opportunity inherent in its planned spin-off of Time Warner Cable — after its pending merger with Adelphia Communications Corp. is completed — in the next nine to 12 months.
“AOL is an extremely important part of our company,” Parsons said. “I like to think that even though it may not have worked out exactly as people had hoped and thought — including myself — when the merger was announced in the early part of this decade, it is now clear to me and it’s clear to our management that this [AOL] is our play in the fastest-growing sector of the economy.”
Parsons said one reason for the Time Warner Cable spinoff is to create a deal currency to participate in further cable consolidation, and a possible AOL stock could similarly participate in Internet consolidation.
“We have concluded at this point in time it doesn’t appear that there’s a need for that” Internet currency, Parsons said. “But we keep that in our sights so that we can maximize the value of that company. We would never want to lose it [AOL], but we just may want to empower it to do some things it can’t now do.”
Parsons also restated Time Warner’s interest in Cablevision Systems Corp.’s New York area cable operations.
Cablevision CEO James Dolan said at his own annual shareholders meeting May 19 that while he believes a sale is unlikely, he’d be open to consider offers.
Parsons said that whether Cablevision would come up for sale is entirely up to its controlling shareholders, the Dolan family.
“When they do [decide to sell], we’ll be there,” Parsons said, adding that he would not pay an inappropriately high price for the assets.
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